Price Of Oil
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     vermante
Member
Username: vermante
Post Number: 561
Registered: 11-2002Rating: N/A
Votes: 0
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| | Saturday, April 15, 2006 - 08:29 am: |  
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Steve Forbes predicts that skyrocketing oil prices are just temporary and that a massive price collapse is coming that will bring oil down to $35 to $40 per barrel and dwarf the Dot-Com crash of 2000.
Be alert-
Cheers
Vermante
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rederob
Member
Username: rederob
Post Number: 1751
Registered: 10-2002Rating: N/A
Votes: 0
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| | Saturday, April 15, 2006 - 11:07 am: |
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vermante
If that were to happen I would pile all my money into oil stocks.
There is just enough incentive at $60/bbl for the seven sisters to explore the ends of the earth and the bottoms of the oceans.
So any dip below $40 would see an incredible retraction in exploration and a focus on production alone.
Just as the mining boom is presently exacerbated by a prior lack of exploration and capacity expansion, so too would the oil industry suffer a similar fate. Note that the oil sector is significantly tighter than metals.
I think Forbes is wealthy, but not too wise to the oil market.
At this stage, global economic growth will squeeze another $10-20 out of oil by the end of the US summer, so I think we should be more alert to upside near/medium term.
I don't think we will have $100 oil this year, but I would be very surprised if we did not get there late next year.
Unless there is a global economic meltdown in the interim, I will be making book on it.
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justice
Member
Username: justice
Post Number: 574
Registered: 01-2003Rating: N/A
Votes: 0
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| | Saturday, April 15, 2006 - 01:29 pm: |
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The article below is related a worthy of consideration.
http://www.safehaven.com/article-4974.htm
... XXXX2 ... :-)
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rederob
Member
Username: rederob
Post Number: 1753
Registered: 10-2002Rating: N/A
Votes: 0
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| | Sunday, April 16, 2006 - 09:08 am: |
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justice
An interesting link, but not much on oil!
The proposition essentially is that we are nearing a commodity bubble and that it will soon correct: I agree.
But will it burst?
I don't think so.
Unlike a true bubble which is sustained by hype and hot air, the commodity bubble is underpinned by two key forces.
First is the transfer of wealth from funds moving out of other financial instruments and into commodities in a big way. Albeit notionally speculative, this transition is relatively safe for now as the equities benefitting from higher prices give a semblance of "normality", by running up huge profits and maintaining low PEs.
Secondly, and more importantly, apart from tin and lead all the base and precious metals are in strong physical demand and so too are oil and gas. In this light, the funds newfound entries into commodities are looking good as they are having to compete for positions against consumers who desperately need their commodities to stay in business.
In other words, while there is a strong speculative capital inflow, it is being matched by a real need for offtake rather than rollover.
Against all this we not only have a global economic backdrop that is gathering pace, we have US capacity utilization in the industrial economy increasing to 81.3% in March, the highest level since September 2000.
The best time to hunt for bears is when you can see them.
Right now we have a herd of bulls running amok in the top paddock.
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