Question for Those Who Think Oil is Speculation

IF oil is pure speculation, how come the curve is trading above 115 or so out to 2014. Actually, I thought CNBC posted 116 through 2016 earlier today or yesterday. CL is a big market and producers can sell their oil on the futures market. XOM and several others say publically it's about speculation. Why doesn't Saudi, Russia, Exxon, Chevron, OXY, Apache, SU, CNQ, the nation of Nigeria, Venenzuela (this list is very long) sell their oil in advance on the futures exchange at such a "speculative" price and bring their massive reserves into production over the next 8 years and take advantage of the stupid speculators (oh, and by the way the small specs were almost record net short CL a week or two ago and still are short CL)? I would like to see some answers that make sense to explain away all these oil countries and businesses involved in a multi-trillion dollar business that must be plain stupid.

Edited by Cirrus, 09 May 2008 - 03:12 PM.

Link to CL Strip

Here's a link for verification. Dec 2016 CL traded 206 contracts today with a 3331 OI and closed at 117.16 (high 118.07 and low 115.55).

Edited by Cirrus, 09 May 2008 - 03:17 PM.

I'm not going to give you what you want, but I'd like to put forward my spin on this. I heard the other day that 2,000 new cars a day are going on the streets of china, that they have a new coal plant going on-line about every 1 to two weeks. That they are experiencing growth like the world has NEVER SEEN. Oil aint never going to be cheap again. But I'm sure that bubbles will form and bust, oil will rise and fall. 200 PE stocks in china will one day implode. But with global demand for energy now growing at an outragous pace, we will eventually realize we MUST have rechargable cars and eventually even the radical anti-nuclear crowd in the US will admit that it's far better to charge those cars with Nuclear energy which can last us hundreds of years than with dirty coal power.

Remember, Trade to make money, not to impress others with your genious. Don't get stubborn if the shorts take it down over the next few days. Oil drillers are diverging against crude and I can promise you that means a BIG move one way or the other. Don't get in the way or be stubborn.

IF oil is pure speculation, how come the curve is trading above 115 or so out to 2014. Actually, I though CNBC posted 116 through 2016 earlier today or yesterday.

CL is a big market and producers can sell their oil on the futures market. XOM and several others say publically it's about speculation. Why doesn't Saudi, Russia, Exxon, Chevron, OXY, Apache, SU, CNQ, the nation of Nigeria, Venenzuela (this list is very long) sell their oil in advance on the futures exchange at such a "speculative" price and bring their massive reserves into production over the next 8 years and take advantage of the stupid speculators (oh, and by the way the small specs were almost record net short CL a week or two ago and still are short CL)?

I would like to see some answers that make sense to explanin away all these oil countries and businesses involved in a multi trillion dollar business that must be plain stupid.

They aren't stupid. They are just going along with the speculative trade. They love it.

Remember, the whole world thinks that the US and the US dollar is in major trouble. Russian newspapers are salivating over the impending demise of the US, that they expect any day now.

So if they are getting dollars for their oil, why wouldn't they be happy that its getting priced higher and higher. Maybe they are hedging a little, who knows.

How many people at the top of the housing bubble thought that its about to stop ? Just about everyone was involved into speculation. there were beautiful stories, about baby boomers needing at least 3 homes each, and that there is a shortage of swamp land in Florida and soon US will run out of land, and so on. There is always a beautiful story behind every bubble that sucks in just about everyone.

In reality there is no shortgage of oil, and the demand didn't grow by 30% since January. Notice, oil always rallies on "worries over supply", not once there was an interuption in supply, if anything inventories keep coming out higher then expected time after time. And Petro Bras seems to be discovering huge oil patches almost daily.

Plus that horrendous mess in the middle east that our favorite president has created isn't helping either.

People are afraid to put their money into paper assets. So they are stuffing them into "real things", aka, commodities of all kinds.

So its really a combination of things. Who knows when it ends, I'm not trading oil. I'll wait till it tops and then short the living [bleeeep] out of the oil companies. But its not time yet to take long term positions.

This oil bubble will lead to ultimate demise in oil. As car companies and consumers will be forced into new technologies ( VLNC comes to mind ). And once the demand for oil starts reversing there will be absolutely no future for that sector.

Will be a great short. But as I said it may take quiate a bit of time, maybe even measured in years.

In the meanwhile, oil is about to devastate the US consumer and economy. Consumer psychology will be severely crippled and so will be the economy for a long time to come.

I think the economic data is about to start turning really ugly.

Edited by ogm, 09 May 2008 - 03:29 PM.

Oil drillers have been diverging since last year. The OSX to CL ratio is VERY low from historical standards and confirms that market participants think CL will rise until worldwide demand cracks (then we'll have our CL correction but it isn't going much below 100 again).

i think oil prices are on a bubble and will come down precipitously .... but who knows when. i also believe that we'll see "high" oil prices for the duration but high could be anywhere from $50 to $80 a barrel. ed rader

Go ahead and drink the brown koolaid ... There's no way in hell to justify the sudden sharp runup in prices other than it is a short-squeeze from hell ripoff. Plus the idiots in Washington insisting on filling the reserves at the highest prices. It's going to break the same way they all break. I still have friends who drank the dotcom Koolaid holding on to $65 CSCO, hoping it will come back 7 long years later... Go ahead and believe it.

i think oil prices are on a bubble and will come down precipitously .... but who knows when. i also believe that we'll see "high" oil prices for the duration but high could be anywhere from $50 to $80 a barrel.

ed rader

I'm not trying to sound like a perma-bull on oil because I'm not. But, I need to point out the obvious problem here:



Is there anyone here who DOESNT think this is the top? Who DOESNT think we are going to 50-80?


I have CNBC and Bloomberg on all day. I must have heard Oil Bubble 30 times today. I heard one Merrill Lynch Commodities trader ST Bullish. That's it. Go look at short interest on XLE, OIH.




Anyway, at this time I will not try shorts on oil. Though I will certainly back off when it does crack. Hey maybe its Monday or Tuesday. Or maybe the short side is just TOO crowded right now. I think the divergences we are seeing in Oil Stocks vs Oil Futures is a reflection of what people expect vs. what is the current reality.

Yeah, I don't think this is the top. $127 is next then we see. Obviously we're in fib expansion mode, you think you can guess the top? You can try around 1.618 that's $113 USO.

http://bigcharts.mar...&mocktick=1.gif

this chart is a work of art, there is not even a stealth sign of weakness in it. This train will run over you and cut you to shreds...

Edited by SemiBizz, 09 May 2008 - 04:31 PM.