[mefistofeles]

[quote]actually agree with Mr Bill I think prices will retreat to mid to low 60's. Unless a war or sanctions break out or some other doomsday scenario.

Time will tell I'd give myseld a 2-3month time frame on the above predictions. Best.[/quote

I think the market is attempting to set the new price now. So far the new price appears to be much higher. Within two to three months we will be in summer and its hard to imagine consumption dropping during that period.

Even though I think energy prices will be higher the real problem that we have is that the market really is in uncharted territory. Its frightening thing to wonder whether or not $100.00 is the upper limit for oil or simply a way point to "infintiy and beyond".

Technically if the markets continue the way they have been acting we could see $100.00 oil in a two or three weeks.

In terms of sentiment even the normally bearish mainstream media seems to believe that the price of oil can only go up.

[JoeCoal]

$this->bbcode_second_pass_quote('mefistofeles', 'a')ctually agree with Mr Bill I think prices will retreat to mid to low 60's.

[drew]

What do you think a nice depression/recession will do to demand?

See '79 Islamic revolution, and early 80's recession; demand dropped by 7 mmbpd from the mid 60s to 57, and did not recover to 1979 levels til 1985.

If everyone in 'mirrka' is broke, and they are even now, and can't afford to pay off their bills, let alone eat, what will happen to demand?

No other economy will escape unscathed either....

Investing in this stuff, and PMs too, I might add, is like surfing a huge wave-ya gotta hope you are smart and lucky enough to get out before it crests.

Drew

[MrBill]

$this->bbcode_second_pass_quote('Concerned', '')$this->bbcode_second_pass_quote('mefistofeles', '
')I don't mean to be rude Mr. Bill but I think it is time to shake people out of this market but its not going to be the longs. Its difficult to see a correction until we have some price stability for at least a week.

[mefistofeles]

$this->bbcode_second_pass_quote('', 'W')hat do you think a nice depression/recession will do to demand?

[Doly]

$this->bbcode_second_pass_quote('mefistofeles', '
')I think most of the people on this board probably believe that the central banks will go crazy with the printing presses so its pretty irrelevant what happens to demand if hyperliquidity is injected into the world's economy.

[mefistofeles]

$this->bbcode_second_pass_quote('', 'F')or me, the question is whether the central banks will go crazy with printing presses or not. After all, they know it wasn't such a great idea in the seventies in a similar situation. What if they try something else? I'm not sure what else they could try, but I expect the guys in here to be able to tell me.

[MrBill]

$this->bbcode_second_pass_quote('', 'D')oing the "right thing" would be a terrible and gut wrenching process for the US. Inflation ,at least in the short term, would probably cause less pain (although the process would still be economically devastating). The Fed has to chose between bad and worse.

[mefistofeles]

$this->bbcode_second_pass_quote('', 'A')s central banks remove cheap, expansionary monetary policies, with or without the Fed's help, which has so far been forthcoming, this will deflate any artificial asset bubbles while producers will not go on manufacturing at a loss in the long-term if consumption can no longer be financed by debt on the back of rising asset prices like homes.

[MrBill]

$this->bbcode_second_pass_quote('mefistofeles', '')$this->bbcode_second_pass_quote('', 'A')s central banks remove cheap, expansionary monetary policies, with or without the Fed's help, which has so far been forthcoming, this will deflate any artificial asset bubbles while producers will not go on manufacturing at a loss in the long-term if consumption can no longer be financed by debt on the back of rising asset prices like homes.

[Chaparral]

Hoo boy! The longs sure got slaughtered today. I got out of all my HU-M06 on Friday near the close. Too bad I kept that damn May Nat Gas though. Makes me glad i kept the forex and US Tbond futures around. They were just piddling along last week and I was ready to dump them for non-performance and today they went up.

[mefistofeles]

$this->bbcode_second_pass_quote('', 'H')oo boy! The longs sure got slaughtered today.

[MrBill]

$this->bbcode_second_pass_quote('', 'I') would argue that current situation is really a result of having too many dollars and too few assets to park them in. If I'm not mistaken the Asian central banks hold 2 trillion dollars in reserves and various other central banks hold another trillion.

[mefistofeles]

$this->bbcode_second_pass_quote('', 'I') think it is short sighted and alienates the few allies the US may have, but again, foreign countries think nothing of blocking foreign investment if it does not suit them. Ever try to invest directly in Egypt? If you do, you will need to open a JV with the Egyptian government as your partner. Then as you sink more money into your project their demands will become higher and higher (sort of like Hotel California, you can check-out anytime you want, but you can never leave). Ditto for China.

[MrBill]

$this->bbcode_second_pass_quote('', 'I') hope you are right because if oil prices go to "infinity and beyond" (Buzz Lightyear from Toy Story) we are in trouble. Unfortunately oil seems to be strong in late Asian and early European trading. Hopefully New York will kick oil down again. However it doesn't seem likely at least for tommorrow. (Depending on your time zone).

I tell you nothing is scarier than wondering if $100.00 is simply a stop along the path of higher prices or the market top.

[MrBill]

Hard to say. A pretty steep decline yesterday after NY came in, but to be honest, there was some pretty wild two way action. Made money in both directions, but it is never enough. But just so hard to read and stay ahead of the sentiment at the moment. Numbers out this afternoon. The market is expecting a small draw in crude and a larger drawdown in the gasoline stocks. Should be supportive overall, but this market is not exactly trading on the back of US fundamentals at the moment.

Yesterday Bush's announcements smacked of desperation. Remember that releasing SPR stocks last year in the wake of Katerina helped calm markets. Now the market is concerned about supply, despite amply crude oil stocks in the US. Halting additions to the SPR now while supplies of crude are robust is very short sighted. Those reserves need to be there the next time there is a genuine shortage of supply, not to cool prices right now. I am sure in the longer run the market would take more sollace knowing that the SPR was topped off than partially empty heading into either Iran related disruptions or another hurricane season?

$72-74 on the wide. Seems daily support at $73 with resistance at $7360. Hourly support at $7320-30, and a slightly bullish picture emerging with products up on the day. Likely a quiet afternoon ahead of NY again and the release of the DOE numbers:

$this->bbcode_second_pass_quote('', 'A')nalysts at Wachovia Corp. expect the Energy Department to report a 2 million-barrel fall in crude inventories for the week ended April 21, which would mark a second straight week of declines. Fimat USA expects an increase of 1.25 million barrels. A survey of analysts conducted by Platts shows that the market, overall, expects a decline of 250,000 barrels.
Motor gasoline supplies likely fell 3 million barrels, Wachovia said. Fimat expects a 3.3 million-barrel decline, while the Platts survey calls for a decline of 2.3 million. Supplies of the fuel have already dropped more than 23 million barrels in the past seven weeks, according to government data.
Distillates, which include heating oil and jet fuel, likely fell 1.8 million barrels last week, according to Wachovia. Fimat predicts a similar decline, while the Platts survey expects a 1.55 million-barrel fall.

[MrBill]

DOE numbers came out and so far the market does not know what to do with them? A lot of ground covered, but no change in direction? Crude has a slightly weaker tone to it, but gasoline is up on the 8th consecutive drawdown in stocks.

Crude -200K (less than expected)
Gasoline -1.9 mio (less than expected)
Distillates +1.0 (less than expected)
Refinery Runs +2.0% to 88.2% (higher than expected)
Imports 9.86 mbpd

Gasoline demand +0.3%
Distillate demand -2.8% (more than expected)
Total demand +1.3% (not a good sign given these high prices!)

Think on balance there was less drawdown than expected, but gasoline will worry participants and may force the crude higher regardless? On the otherhand the higher refinery runs does point to more product going through the system, so builds may still occur ahead of the summer driving season, plus abandoning environmental standards in the face of rising prices is always a good short-term strategy if not an outright retreat from your principles, but may ease shortage concerns somewhat from the market's point of view?

Ah heck, Iran is going to tell the IAEA to get stuffed on Friday and that is the major factor right now. Everything else is window dressing! ; - )

[Typhoon]

I would have thought that this report would be bearish. Sure, we had another gasoline drawdown, but wasn't it in line with expectations? Were there that many people expecting a build in gasoline?

The June/July spread has widened to $1.50. It seems that the contango between the front month and second month is very wide all the time, yet the contango in the back months is much less. However, when the second/third month spread becomes the first/second month spread, it always widens. If it's this easy to predict, why don't seasoned traders do a long calendar spread? (Short the second month, long the third month before the front month expires.)

Anyhow, the first month/second month contango indicates that the market consistently prices in the possibility of a supply disruption that never unfolds in the physical market. Clearly, this situation is unsustainable. COT reports show that hedgers are increasingly short, but surprisingly the nonreportable positions (small specs) are also net short. The people with big net long positions are the large speculators.

I can't help but think that geopolitical concerns are holding up the market. Any good news from Nigeria should lead to a sharp correction in prices. Technically speaking, there should be support at $68.95 to $69.20, if not at the psychological level of $70.

[MrBill]

Think you're right Typhoon! The market finally did decide to go lower, but only after a lot of back and forth activity. Maximum pain, minimum gain as usual on the NYMEX! ; - )

Some good news from Chad. Apparently in return for turning the taps back on the World Bank will keep lending to this corrupt little country, and they will unfreeze some oil money accounts, which were supposed to go for things like, um, development, so that Chadanese kleptocrats can get their grubbies on those monies!

Boy, along with the decision to relax EPA standards in the face of higher pump prices, groundwater contamination be damned, I can hardly wait for the powers to be to decide that scrubbers and filters on coal fired power plants are a waste of time after all?

What's next, bringing back leaded gasoline? Isn't political expediency great?! ; - )

So as you can see, we did finally test back down to (sub) $7200, but not a lot of follow through. China is going to invest in Nigeria in exchange for getting access to some juicy oil fields. Well, they have the largest standing army in the neighborhood, so perhaps they might be able to line the pipeline route with soldiers to keep the Nigeria people from collecting their due instead of waiting for the central government to get around to solving some rural povety issues in the Niger delta?

We should be thankful to the India's and the China's of the world. Their total lack of shame in dealing with some of the nastiest regimes in the world assures us all of a steady supply of oil & gas. And as oil & gas are fungible, their taking tainted barrels gives us a free conscious about taking ours from only democratic countries that love freedom without the aggravation of having to pay more for that guilt-free energy. Thank you China. Thank you India.

So just for a change. I thought I would post this article from a financial advisor from Reuters. Good for a laugh.
$this->bbcode_second_pass_quote('', ' ') Investing: The allure and risks of foreign stocks
Mon Apr 24, 2006 2:55 PM ET



By Linda Stern

WASHINGTON (Reuters) - Foreign stocks have become so popular in the United States that whole exchanges are now shopping abroad. Both the New York Stock Exchange and the Nasdaq have been competing to buy the centuries-old London Stock Exchange.

It's just another symptom of the fever individual investors have displayed for a few years now. In 2005, Americans put three times as much money into foreign stock funds as they did in domestic ones. This year, they've been flinging roughly $3 billion a week overseas, according to AMG Data Services.

What's the attraction?

European stocks are cheap, compared with U.S. issues. Developing markets, like many in Latin America and Asia, are growing rapidly and have the capacity for huge expansion.

Foreign stocks can help reduce the risks of an all-American portfolio. And some investors, like the clients of Oakland, California, money manager Jim Bell, are trying to steer at least some of their money away from U.S. markets because they are stressed by "a weak and unpopular president fighting an expensive and unpopular war," he says. "This creates a lot of stress for the U.S. economy."

Bell has been investing some 70 percent of his client's funds in foreign stocks recently, in part because of their concerns about the U.S. economy and in part because of his own beliefs about where opportunities lie. "We think this is mandated and strategic," he says. "Foreign markets are a better opportunity than the U.S. market."

Bell, who tends to use no-load mutual funds to get into industries and assets that seem to have a lot of investor momentum, says he sees opportunities all over the world.

He has been investing recently in the Janus Overseas Fund, which has put a lot of money into Asian countries (except Japan) and emerging markets, and in the Oakmark International Small Cap Fund, which is primarily focused on European stocks right now. He's also been buying the Oppenheimer Developing Markets Fund, a load fund, which is also Asia-heavy, with emphasis on India.

Many Asian companies are in a position to benefit from the growth of China, Bell says.

That's all true. But foreign investing isn't risk-free, especially this late in the game. If you're thinking of putting money abroad, know that yours isn't the first cash in. And consider these possible risks and concerns, too.

-- Different accounting standards. In the wake of Wall Street scandals and the passage of the Sarbanes-Oxley Act of 2002, American companies have been ramping up their audits and cleaning up their quarterly reports. That's not necessarily true of companies headquartered elsewhere.

In some European countries, accounting standards are as much a matter of word of honor as regulation. And standards in some developing countries remain lax. How do you know how much you can rely on earnings reports, for example, from a small Southeast Asian or Dominican start-up? This is a good reason to invest via mutual funds that have analysts on the ground in the countries they are investing in.

-- That weak dollar. "Many investors neglect currency risk in their rush to take advantage of attractively priced international equities," says Russell Lundeberg Jr. of Barrett Capital Management in Richmond, Virginia. "Currency fluctuations must be considered."

The dollar has recovered since last year, but not much. Buy foreign stocks now, with a weak dollar, and you may be paying more than foreign investors who are using their own currency. Furthermore, if the greenback falls more before you sell, you could trade out your profits into even less-valuable dollars.

The vast majority of mutual funds don't hedge their currency risk. Find one that does if you really want to take currency questions out of the investment decision.

-- Big expenses. "Expense ratios matter just as much for international offerings as they do for domestic ones," says Morningstar analyst Gareth Lyons.

It does cost more to manage a foreign fund than a U.S. stock fund, but not so much more that you should give away your earnings in extra fees. For example, the average annual expense ratio for a diversified emerging market fund is 1.48 percent, reports Morningstar. Keep that figure in mind as a maximum.

[MrBill]

Snow Job
$this->bbcode_second_pass_quote('', 'W')ASHINGTON, April 26 (Reuters) - Treasury Secretary John Snow said on Wednesday the U.S. economy was in a "sweet spot" and said it was important not to unleash protectionist trade forces out of anger toward China.
Interviewed on CNBC television, Snow was asked whether Congressional anger at China's reluctance to let its currency rise might foster passage of legislation that puts up barriers against imports.
"I think we'll avoid it. It'd be a real mistake," Snow said. "Those isolationist forces, those protectionist forces, really have to be kept at bay for the sake of our growth and for the prosperity of the globe."
The chairman of the Senate Finance Committee, Charles Grassley, said on Wednesday it was time to stop "pussyfooting" with China over its currency practices that U.S. manufacturers claim have let it unfairly rack up huge surpluses on its trade with America and have cost millions of American jobs.
Snow said the U.S. economy was performing well, which he attributed substantially to Bush administration tax cuts, and said he hoped that cuts in capital gains and dividend taxes would soon be approved by Congress.
"We're in a sweet spot for the economy and we see it in the daily numbers," Snow said. "You see it in the (March) durables orders this morning, up 6.1 percent, I think we'll see strong growth for the first quarter on Friday when that's reported," strong (April) jobs numbers the following Friday when that's reported."
Snow said tax cuts, particularly on dividends and capital gains, introduced by the Bush administration since 2003 lay at the heart of current healthy economic performance
"The evidence here is so clear," he said. "The economy three years ago was suffering from a lack of investment...but since those lower taxes on dividends and cap gains, we've had 11 straight quarters of rising business investment."
Snow added: "The lower tax rates on capital lie at the very center of this strong recovery we've had for the last three years."