Current Oil Price

Andy Hunt · Post by **Andy Hunt** » 02 Jan 2008, 22:25

I feel sorry for the ostrich.

Andy Hunt · Post by **Andy Hunt** » 02 Jan 2008, 23:02

From the BBC article:

"Until we get more supply or demand starts to take a hit, there is no reason we can't see any number."

To me, that's the key sentence - we're talking physical shortage of the resource, the price is irrelevant.

Keela · Post by **Keela** » 02 Jan 2008, 23:21

Independent trader claims $100 oil record

http://www.ft.com/cms/s/0/73a44d1e-b97b ... fd2ac.html

Some observers questioned the validity of the price mark when it emerged that the peak was the result of a trader ? one of the ?locals? who trade on their own money buying from a colleague just 1,000 barrels of crude oil, the minimum allowed. The deal on the floor of the New York Mercantile Exchange was at a hefty premium to prevailing prices, industry insiders said.

Stephen Schork, a former Nymex floor trader and editor of the oil-market Schork Report, said that the price jump was due to a trader seeking his one minute of fame.

"A local trader just spent about $600 in a trading loss to buy the right to tell his grandchildren he was the one who did it,? Mr Schork said. ?Probably he is framing right now the print reflecting the trade.?

Interesting take. And probably some truth in it?

Ps bolds are mine

RevdTess · Post by **RevdTess** » 02 Jan 2008, 23:42

Sally wrote: Interesting take. And probably some truth in it?

Almost certainly. At the time, you could have bought WTI oil for $99.60 on the electronic exchanges, so to pay $100 on the floor of the nymex pit was purely an exercise in ego...

RevdTess · Post by **RevdTess** » 02 Jan 2008, 23:50

Andy Hunt wrote:
"Until we get more supply or demand starts to take a hit, there is no reason we can't see any number."

Very true. Otherwise the price is just pushed around by speculators, technical support and resistance levels, and big geopolitical events which might suggest future changes to supply or demand. If we go convincingly over $100, all things being equal we could quickly end up at $105 and $110. What speculators would likely do is keep buying until OPEC adds more supply (and inventories build) or there are more clear signs of a slowdown in global oil demand. At the moment no one knows if a US slowdown will matter, if China, India et al can take up the slack.

oilslick · Post by **oilslick** » 03 Jan 2008, 00:03

Sally wrote:Independent trader claims $100 oil record

http://www.ft.com/cms/s/0/73a44d1e-b97b ... fd2ac.html

Some observers questioned the validity of the price mark when it emerged that the peak was the result of a trader ? one of the ?locals? who trade on their own money buying from a colleague just 1,000 barrels of crude oil, the minimum allowed. The deal on the floor of the New York Mercantile Exchange was at a hefty premium to prevailing prices, industry insiders said.

Stephen Schork, a former Nymex floor trader and editor of the oil-market Schork Report, said that the price jump was due to a trader seeking his one minute of fame.

"A local trader just spent about $600 in a trading loss to buy the right to tell his grandchildren he was the one who did it,? Mr Schork said. ?Probably he is framing right now the print reflecting the trade.?
Interesting take. And probably some truth in it?

Ps bolds are mine

That's completely made my evening...if I'd known it would have been that easy I might have done it myself!

$600 for an item on every news programme tonight and to be remembered at least for a little while. Shall we chip in for $200, 1000 barrels...if we sit on them we'll get our money back in a couple of years anyway

Post by **clv101** » 03 Jan 2008, 00:10

Tess wrote:At the moment no one knows if a US slowdown will matter, if China, India et al can take up the slack.

Really? It seems highly unlikely to me that a US slowdown wouldn't reduce global demand. The US is so elephantine, consuming either directly or indirectly through imported products, approaching 50% of the world's energy. How could China take up the slack with increased demand at the same moment as US demand for Chinese production capacity was falling away?

RevdTess · Post by **RevdTess** » 03 Jan 2008, 00:17

clv101 wrote:
Tess wrote:At the moment no one knows if a US slowdown will matter, if China, India et al can take up the slack.
Really? It seems highly unlikely to me that a US slowdown wouldn't reduce global demand. The US is so elephantine, consuming either directly or indirectly through imported products, approaching 50% of the world's energy. How could China take up the slack with increased demand at the same moment as US demand for Chinese production capacity was falling away?

The question remains 'how much US slowdown can the rest of the world ignore or absorb, and how much time lag would there be between a US recession and a global oil demand drop.'

So far, every piece of poor US economic data has initially caused expectations of oil demand to weaken, but then we see western demand staying strong, inventories continuing to draw in the US, and no sign of Asia slowing their rampant growth. So now no one is sure how much of a US economic slowdown is needed before oil demand falls off and the consumerist yank of the chain is slackened. The market waits, and watches.

SunnyJim · Post by **SunnyJim** » 03 Jan 2008, 08:57

clv101 wrote:
Tess wrote:At the moment no one knows if a US slowdown will matter, if China, India et al can take up the slack.
Really? It seems highly unlikely to me that a US slowdown wouldn't reduce global demand. The US is so elephantine, consuming either directly or indirectly through imported products, approaching 50% of the world's energy. How could China take up the slack with increased demand at the same moment as US demand for Chinese production capacity was falling away?

Seems to me the demand is already there. There are consistently huge queues for diesel in China. If it arrived they'd be all to happy to take it.

Joe · Post by **Joe** » 03 Jan 2008, 09:07

Tess wrote:
clv101 wrote:
Tess wrote:At the moment no one knows if a US slowdown will matter, if China, India et al can take up the slack.
Really? It seems highly unlikely to me that a US slowdown wouldn't reduce global demand. The US is so elephantine, consuming either directly or indirectly through imported products, approaching 50% of the world's energy. How could China take up the slack with increased demand at the same moment as US demand for Chinese production capacity was falling away?
The question remains 'how much US slowdown can the rest of the world ignore or absorb, and how much time lag would there be between a US recession and a global oil demand drop.'

So far, every piece of poor US economic data has initially caused expectations of oil demand to weaken, but then we see western demand staying strong, inventories continuing to draw in the US, and no sign of Asia slowing their rampant growth. So now no one is sure how much of a US economic slowdown is needed before oil demand falls off and the consumerist yank of the chain is slackened. The market waits, and watches.

I read a piece in Moneyweek a couple of weeks ago about the extent of the decoupling of eastern & western economies; the author concluded that Chinese growth is still utterly dependent on US (and to a much lesser extent EU) economic health.

Given that the goods produced by China are higher up the discretionary spending hierarchy (i.e. US consumers are likely to cut spending on plastic tat before cutting spending on gasoline or fuel oil), I guess it's conceivable that the US economic slowdown could bring about a slump in Chinese oil demand even before US gasoline demand is materially curtailed.

But of course, this is pure speculation and one must factor in lags in the Chinese manufacturing cycle relative to the likely speed of the onset (and ultimate extent) of a US/world recession etc. Hence the uncertainty in the markets, I guess...

Vortex · Post by **Vortex** » 03 Jan 2008, 09:08

Terror premium; weather premium; Xmas premium; driving season premium; trophy 100$ trade .. who cares ... we are VERY close to $100 and yet everyone is sort of saying:

"It's not really $100, it's just $$65 ... it just looks like $100".

I wish I could treat my tax bills or my mortgage in that way.

Joe · Post by **Joe** » 03 Jan 2008, 09:14

Vortex wrote:"It's not really $100, it's just $$65 ... it just looks like $100".

I wish I could treat my tax bills or my mortgage in that way.

Given the way we measure inflation you could treat the contents of your wallet in that way

PS_RalphW · Post by **PS_RalphW** » 03 Jan 2008, 16:15

I'm beginning to expect this. After hitting $99.98 in 'normal' trading, the weekly US stock report shows total petroleum stocks down by 7M barrels - and the WTI price drops like a stone. Now reading $98.95 on the ticker.

And that after Tapis passes $103.

RevdTess · Post by **RevdTess** » 03 Jan 2008, 16:43

New WTI high: $100.09

Totally_Baffled · Post by **Totally_Baffled** » 03 Jan 2008, 20:19

Tess wrote:New WTI high: $100.09

Hi Tess

In your view Tess do the fundamentals support this price?

This is more than double last years price (i think we were at $49.90 at the low last year).

Inventories are not in the most ideal place - but they dont seem to be that bad? (especially finished products like gasoline and distillates which seem to be recovering and within the 5 year average range?)

Although days cover is well below last year....

http://tonto.eia.doe.gov/oog/info/twip/twip_crude.html

God knows what the price will do if US inventories were what I would consider "low", ie below the 5 year average on oil, distillates and gasoline!