[BabyPeanut]

http://www.cbsnews.com/stories/2005/02/ ... JRG0.shtml
$this->bbcode_second_pass_quote('', 'C')rude oil futures _ which surged earlier this week as the dollar tumbled _ fell slightly after the GDP report. A barrel of light crude closed at $51.49, up 10 cents, on the New York Mercantile Exchange.

Oil stocks rallied, resuming their place at the forefront of the market. Exxon Mobil Corp. was up $2.13 at $63.26, while ChevronTexaco Corp. added 78 cents to $61.94 and ConocoPhilips climbed $2.14 to $112.32. All three stocks reached all-time intraday highs in Friday's trading.

"You've seen energy stocks taking off while technology stocks have been lagging since mid-December," said Ken Tower, chief market strategist for Schwab's CyberTrader. "I think if energy stocks are going to lead the market, then tech stocks won't be. Energy stocks represent higher consumer prices, and that will cause technology stocks to suffer."

[maverickdoc]

what are you trying to say BP?

[mgibbons19]

So according to the cheerleaders, there is an energy bubble, but there is no housing bubble?

Anyone taking bets?

[BabyPeanut]

$this->bbcode_second_pass_quote('maverickdoc', 'w')hat are you trying to say BP?

[maverickdoc]

$this->bbcode_second_pass_quote('BabyPeanut', '')$this->bbcode_second_pass_quote('maverickdoc', 'w')hat are you trying to say BP?

[ernest]

$this->bbcode_second_pass_quote('maverickdoc', '')$this->bbcode_second_pass_quote('BabyPeanut', '')$this->bbcode_second_pass_quote('maverickdoc', 'w')hat are you trying to say BP?

[JohnDenver]

$this->bbcode_second_pass_quote('', 'A') growing number of people in the energy industry, including the chairman of Exxon Mobil, are voicing concern over whether soaring oil prices are justified by conditions in the market.

Some are even comparing the trading in energy markets to the speculative frenzy in technology stocks in the late 1990s.

[smiley]

I'm personally inclined to say that the prices are indeed too high. I certainly wouldn't go long at the moment. Certainly not on the April or May contract.

But on the other hand everyone is saying that. Everywhere you hear the same story: "Stocks are good, production is good, these prices are not justified". I had a discussion with some traders yesterday, and without exception they were short at the moment.

So if there is a bubble, who is sitting on the long side? The last OPEC oil market report showed that the long position is small. In fact it has been much larger in previous months. This seems to confirm the statements of Nymex, that speculation is not driving the markets at the moment.

Without an excessive long position, there can not be a bubble. What we see now are the real market fundamentals.

[0mar]

Light crude is becoming more valuable. We have a glut of intermediate and heavy crudes, but that light stuff is rare. As it should be, it is the first crude pumped out of a field. Light crude is mainly responsible for gasoline.

[ernest]

Yes, the only three refiners that refine heavy crude in the US have not built a new refinery in decades. They also have more than doubled in price in the last year. Valero has double in six months. Premcor has double in the last six months, and Tesoro has doubled in the last year.

That's it. All that Saudi sour crude has to go through one of these companies refineries to become gasoline, etc.

[cube]

$this->bbcode_second_pass_quote('0mar', 'L')ight crude is becoming more valuable. We have a glut of intermediate and heavy crudes, but that light stuff is rare. As it should be, it is the first crude pumped out of a field. Light crude is mainly responsible for gasoline.

[qwanta]

One thing to look at is the p/e (price/earnings) ratio of oil companies:

BP 17.3
ChevronTexaco 9.5
Exxon 15.6
Shell 13.1
Unocal 14.4
(finance.yahoo.com)

15-20 is a p/e historical average that is often cited. By this measure at least they wouldn't seem overpriced.

In comparison the NASDAQ p/e hit 246 in Feb.2000 and is now still around 30.
(usatoday.com)

[BlisteredWhippet]

Everything looks normal from here...

http://tonto.eia.doe.gov/oog/info/twip/ ... tml#stocks

[dukey]

personaly i disagree but a lot of people in the 'investment' community think this is so. some blame the media for pushing the prices higher by getting people 'scared' Link

[Z]

Strange. I thought that a precondition for a bubble is that everyone agree that the price can only go higher ( like in a certain housing bubble that shall remain anonymous ).

[turmoil]

oil prices are cyclical so they are partially right... Where prices will go long-term, however, has nothing to do with traders. It's geology stupid.

[newdamage]

Usually a bubble means that for a relatively short period of time there's a perceived scarcity of something and people rush to get as much as possible.

With the current housing bubble it is based around location, not about a lack of open land to build on. There's nothing stopping all the people on the coasts from coming here to the midwest and building a house (please! don't! we like the midwest just fine without the crazy Californians and New Englanders).

But with any oil bubble, well, even if it does come down it doesn't change the fact that this bubble is about a very real scarcity, not some perceived scarcity.

[Eli]

I agree it is all bubble,

the whole of the twentieth century has beenone big bubble. The whole cheep and easy energy that gave birth to our modern economic system is one gigantic bubble.

[Free]

Sometimes I really wonder what would happen on this board if Lynch et altera where right and ppb would plummet to $30 and stay there for the next couple of years...

[advancedatheist]

When the housing bubble does collapse, all the houses will still exist, apart from the slow attrition to the supply caused by fires, natural disasters and demolitions.

If the price of oil collapses, however, that doesn't change the underlying reality of depletion and the fact that the world's population still consumes a billion barrels of the stuff every 11-12 days, which sets the stage for another price singularity down the line. The two bubbles have dissimilar causes and long-term outcomes, in other words.