Current Oil Price

emordnilap · Post by **emordnilap** » 01 Jun 2012, 12:41

adam2 wrote:Many seem to be expecting that the oil price will soon return to "normal" levels of about $30.

emordnilap wrote:It is not impossible. Doubtful, perhaps, but stranger things have happened.

biffvernon wrote:It is impossible unless there's a massive global recession.

moimitou · Post by **moimitou** » 01 Jun 2012, 14:37

I think bundles of economic figures were supposed to come out today and yesterday. The figures might have been terrible, hence having drastic repercussions on oil prices.

PS_RalphW · Post by **PS_RalphW** » 06 Jun 2012, 15:06

Brent has rebounded above $100 today. Spanish bailouts and German bank downgrades notwithstanding.

Little John · Post by **Little John** » 06 Jun 2012, 18:13

Oil and stock markets expecting the printing presses to be fired up imminently?

Aurora · Post by **Aurora** » 08 Jun 2012, 19:33

BBC News - 08/06/12

Oil prices have dropped to $98.06 in London - their lowest in 17-months on fears of waning economic growth in China.

The New York benchmark oil price was also lower, falling to 1.4% to $82.99 in early trade.

Brent Crude is now down 28% from its March peak as traders bet on reduced demand from Chinese factories.

Article continues ...

PS_RalphW · Post by **PS_RalphW** » 08 Jun 2012, 21:19

Already rebounded to nearly $100. There is a lot of volatility in the price, a lot of money to be made by canny traders.

UndercoverElephant · Post by **UndercoverElephant** » 21 Jun 2012, 11:02

Yes, there's a lot of volatility and it is getting increasingly hard to predict what is going to happen to the price of oil.

I think that in a way, peak oil has ceased to matter much, at least until such time as the global debt crisis has played itself out. The reason for this is that there is now such a widespread and serious lack of confidence about the state of the global economy that the downward pressure on demand is having more of an effect on the price than any upward pressure cause by supply problems. Until very recently, most "demand destruction" was being caused directly by high oil prices causing people to cut down their consumption. Now it is being driven by people losing their jobs, seeing their wages cut, or fearing these things are going to happen, and by companies worried about the future and trying to make sure they can make a profit.

Given that we are expecting the economic problems to get much worse, we should also expect the downward pressure on demand for oil will increase in the coming months/years. This in turn will discourage the oil companies from drilling or investing in projects that can only produce expensive oil, because those are only worth doing if they know the price of oil is going to be consistently high.

That's what it looks like to me, anyway.

Blue Peter · Post by **Blue Peter** » 21 Jun 2012, 12:12

UndercoverElephant wrote:That's what it looks like to me, anyway.

A not incongruent view, but with different nuances:(FreeTrader)

When oil came off its top I think a number of people thought it was due to efforts by the US and Saudi Arabia to engineer a price decline because high petrol prices were threatening to damage Obama's re-election prospects. The additional Saudi output would also cover restricted supplies from Iran due to sanctions.

However the accelerated recent drop is likely due to the perceived global slowdown. China's manufacturing is showing continual weakness and of course Europe is slumping too.

The cycle seems to be:

1) Economic slowdown -- >
2) Central banks pump -- >
3) Temporary recovery, but commodity prices rise -- >
4) Inflation higher than household income growth -- >
5) Collapsing consumer demand -- >
6) Goto 1

This is the revolving decline that many peak oil proponents have forecast. We won't see a remorseless increase in the price of oil. Instead, every time the global economy recovers the oil price will spike and that will poleaxe demand, leading to a collapse in output and a corresponding decline in the price of crude...and then we start all over again.

I'm very sympathetic to this thesis.

Peter.

emordnilap · Post by **emordnilap** » 21 Jun 2012, 12:22

It's a view expressed by several people on here for a number of years, usually in response to the $200+ a barrel scare stories.

It's a bumpy ride back down to de-industrialisation.

RenewableCandy · Post by **RenewableCandy** » 21 Jun 2012, 12:32

(gets out toboggan...)

emordnilap · Post by **emordnilap** » 21 Jun 2012, 12:39

It's gonna be hot.

RenewableCandy · Post by **RenewableCandy** » 21 Jun 2012, 16:16

(Grass toboggan...)

biffvernon · Post by **biffvernon** » 21 Jun 2012, 22:48

Down to $78

Has oil gone out of fashion today?

Blue Peter · Post by **Blue Peter** » 27 Jun 2012, 13:35

Can anyone (Sister Clare?) translate this Brent-Contango piece into words of one syllable or less so that I can understand the implications of it (or anything), please?

Peter.

ziggy12345 · Post by **ziggy12345** » 28 Jun 2012, 07:08

Contango is the market condition wherein the price of a forward or futures contract is trading above the expected spot price at contract maturity. The futures or forward curve would typically be upward sloping (i.e. "normal"), since contracts for further dates would typically trade at even higher prices. (The curves in question plot market prices for various contracts at different maturities—cf. term structure of interest rates)

A contango is normal for a non-perishable commodity that has a cost of carry. Such costs include warehousing fees and interest forgone on money tied up, less income from leasing out the commodity if possible (e.g. gold).[1] For perishable commodities, price differences between near and far delivery are not a contango. Different delivery dates are in effect entirely different commodities in this case, since fresh eggs today will not still be fresh in 6 months' time, 90-day treasury bills will have matured, etc.

The opposite market condition to contango is known as backwardation.