Goldman: Oil back to $149 by year end
Bob Morris @ Sep 3rd 2008 08:50 - Category: Unfiled Tags: oil prices;
They think China demand after Olympics will force prices back up.
The Oil Drum continues their countdown to $200 oil
Bob Morris @ Aug 11th 2008 07:48 - Category: Unfiled Tags: oil prices;
Among their well-presented and well-researched data, The Oil Drum says, referring to the chart - does it look like prices are crashing?
So, at this point, I’m still happy to continue my “Countdown to $200 oil series” and see no reason why the recent lull in prices would be a sign of a serious trend change in the market.
In fact, I’ll say again that our energy policies should focus on one thing first and foremost: demand reduction.
Drop in oil prices possibly due to speculation
Bob Morris @ Jul 23rd 2008 20:31 - Category: Unfiled Tags: oil prices;
SemGroup just filled bankruptcy after a $3.2bn trading loss in commodities. Interestingly, they were short oil, meaning they expected prices to drop. But a wildly flucuating oil market combined with other traders smelling SemGroup blood in the water forced them to liquidate their positions at a huge loss. Thus, speculation may have been directly responsible for a drop in oil prices.
From the comments to the post on Naked Capitalism.
Sorry to be dense, but why would covering a short position cause prices to fall? Seems like they would instead rise as the position was bought in.
Other market participants will be aware of their predicament and deliberately move the market against the hapless trapped firm in order to force a liquidation. Once they succeed, they can take off their own positions.
Energy crisis, A discussion with Matt Simmons
Bob Morris @ Jul 17th 2008 07:41 - Category: Peak oil Tags: oil prices;
Gasoline historically has been extremely cheap. It still costs less than beer or most any other liquid. Matt Simmons thinks gas could go to $12-15 a gallon. Demand is increasing while supply is dropping. That’s the problem.
Matt Simmons on oil prices
Bob Morris @ Jul 14th 2008 07:37 - Category: Peak oil, Renewable energy Tags: oil prices;
He sees the biggest obstacle stopping us from going to renewables is the mistaken belief that oil prices are temporarily high and will drop. So rather than deal with the problem, we’re going on a witch hunt to see who is keeping prices up.
Even if we started drilling offshore everywhere now, we wouldn’t see the results for ten years. One big problem. All the offshore rigs are already in use. He thinks 5-7 years hard work in renewables like geothermal and wave power could “get us out of a very deep hole” but we need to start now. We also need to, among other things, eliminate long-distance commuting and grow food locally.
Thoughts on oil speculation
Bob Morris @ Jul 10th 2008 17:48 - Category: Unfiled Tags: oil prices;
If speculation was mostly responsible for the rise in oil prices, then massive intervention by a central bank shorting oil should be enough to drive prices down. But this hasn’t happened. So, either they don’t want to intervene (doubtful) or they know that intervening would do little to lower prices.
The Fed and other governmental entities certainly seem to have intervened in the stock market at times to stabilize a teetering market, something half-jokingly referred to as the actions of the Plunge Protection Team.
But this hasn’t happened with oil. Which leads credence to the view that decreased supply and increased demand, not speculation, are what’s pushing prices higher.
Crude today is dirt cheap: Matthew Simmons
Bob Morris @ Jun 30th 2008 01:35 - Category: Unfiled Tags: oil prices;
Matthew Simmons is founder and CEO of Simmons and Co, an investment bank to the energy industry.
He says the Tata Nano at $2400 is the future of cars, that the US needs to get off its ravenous appetite for oil now, and that the primary driver of high oil prices is increasing demand and declining supply.
As for those evil speculators.
Speculators are mostly betting that crude will soon crash, so I suspect this group of investors is net short, and if they are banned from speculating, oil prices will jump higher.
Nationalize the oil companies?
Bob Morris @ Jun 17th 2008 10:29 - Category: Unfiled Tags: oil prices;
Climate and Capitalism says “Nationalize big oil, enemy of people and planet” but that won’t necessarily solve the problem.
The biggest oil entities on the planet already are nationalized. Companies like Exxon-Mobil, are smallish in comparison.
Ranked on the basis of oil and gas reserve holdings, 14 of the top 20 upstream oil and gas companies in the world are national oil companies or newly privatized national oil companies. State monopolies represent the top 10 reserve holders internationally.
Of the top 20 oil and gas producers worldwide, 14 are national oil companies or newly privatized national oil companies,
So, nationalization in and of itself doesn’t appear to solve the problem of rising prices. A national oil company may offer low subsidized prices to the populace, but that money has to come from somewhere. The real driver of high gas prices is increased demand. So, we need better, more efficient ways to use oil as well as lots of renewable energy sources. That’s what will cut demand.
Loony Bird Lieberman and commodity speculation
Bob Morris @ Jun 13th 2008 12:33 - Category: Unfiled Tags: Lieberman, oil prices;
Meanwhile, the other senator from Connecticut, Loony Bird Lieberman wants to ban institutional investors from commodity speculation, a proposal which demonstrates his almost total ignorance of how markets work. While speculation is certainly part of it, increasing demand and flat-to-declining supply is the more probable driver of price rises.
Speculators can and do provide a bottom in declining markets, buying when others are afraid to, thus stabilizing prices. Plus, some speculators now are undoubtedly betting prices will fall, are they now the Good Guys fighting for the American Way (AKA cheap oil) against the evildoers who heartlessly scheme for more price rises? Stay tuned for the next exciting installment from Lieberman World.
A better plan would be to increase the amount of margin necessary to make trades and cap the amount of open contracts permissible. But banning institutional investors completely would almost certainly destabilize the markets at a time they don’t need more uncertainty and probably create all manner of unintended and negative consequences. Not that that matters to the loose cannon senator from Connecticut.
Has oil peaked, at least temporarily?
Bob Morris @ Jun 3rd 2008 23:03 - Category: Unfiled Tags: oil prices;
A cover story by The Economist about high oil prices would, assuming you believe in contrary indicators, indicate at least a short-term top in prices. That’s what The Big Picture thinks, saying “Painful though it is, this oil shock will eventually spur huge change. Beware the hunt for scapegoats”. I agree.
A fine rant on commodity speculation
Bob Morris @ Jun 3rd 2008 14:15 - Category: Unfiled Tags: food prices, oil prices;
From options trader Philip Davis.
Who are the apologists at CNBC really protecting? Bloomberg says it’s the investment banks, who have churned free Federal loans along with an investor frenzy into $596 TRILLION of speculative derivative investments “including those based on debt, currencies, commodities, stocks and interest rates.” THIS IS A 44% INCREASE OVER LAST YEAR! Commodity derivatives alone expanded by 26.5 percent as the price of gold and oil reached records. Contracts based on gold rose the most in the second half, by 40 percent to $595 billion. COME ON BODMAN, TELL ME AGAIN HOW THERE’S NO SPECULATION DRIVING COMMODITIES!
It is important to understand that in commodities, futures prices drive the spot price — however counter-intuitive that may seem — and not the other way around. The chart clearly shows a smallish rise in actual demand but a huge spike in futures trading.
People aren’t just running out of gas money, they are also starving to death and let’s hope that our finally Democratic Congress finds this as unacceptable as the people who voted them in think it is.
Indeed. Will President Obama truly be able to deliver, assuming he genuinely wants to? Let’s hope so. A genuinely progressive president would be a huge step in the right direction over the psychoses of the past eight years.
Feds investigate possible oil market manipulation
Bob Morris @ May 31st 2008 10:14 - Category: Unfiled Tags: oil prices;
An investigation of oil trading by the U.S. Commodity Futures Trading Commission will likely target evidence that traders intended to manipulate markets rather than just schemed to make money, former officials of the agency said.
Who woke the CFTC up from their nap? Congress apparently, and the unsettling thought to them that another agency, the FTC, might start investigating and thus invade their turf. Gasp, can’t have that. Let’s make righteous noises that indicate we are On The Job instead.
If options trader Philip Davis can clearly explain how futures traders manipulate the oil markets (and he’s been doing so for months), why has the CFTC just now wiped the sleep from their eyes and decided maybe there’s a problem here?
The Oil Shortage, and Other Fairy Tales
Why oil prices keep rising
Bob Morris @ May 28th 2008 02:03 - Category: Renewable energy Tags: oil prices;
The problem is two-fold. Supply is not rising as prices increase because there is no excess supply. But more importantly, demand across the world is increasing fast.
In the next 17 years, plans are to move 300 million Chinese from farms to cities that have yet to be built. They will want roads, cars, buildings and streetlights. The equivalent of five New Yorks, and some 50,000 skyscrapers, are on drawing boards. Already, some 174 subway systems are under construction and a power plant is completed every month. China already has 200 cities bigger than Dallas.
China is hardly the only emerging country to be modernizing fast, just the biggest. The US (and the world) needs the equivalent of a Marshall Plan for clean energy and transportation, with any promising new technologies being shared by all. Let’s take a tip from the open source movement, and apply those principles to cleantech. Anyone can use the technologies for free with the proviso that whatever enhancements they develop are then fed back into the system for the use and benefit of all.
George Soros says the price rise is fueled by speculation, that it is indeed a bubble, but it won’t burst until the US and Britain are in recession and demand drops. Other investors and speculators say we could see $200 a barrel oil. And they could all be correct, we could see a huge price acceleration, then a crash.
