Current Oil Price

Andy Hunt · Post by **Andy Hunt** » 10 Mar 2008, 15:24

Blimey . . . at this rate we will be at $150 by the summer.

SunnyJim · Post by **SunnyJim** » 10 Mar 2008, 15:36

What gives Tess? I thought we were having a quiet day then BANG up she goes.....

Is this the US devaluing their currency again or something?

RevdTess · Post by **RevdTess** » 10 Mar 2008, 15:37

Came as a surprise to me too, to be honest. Dollar was actually getting stronger earlier on. It's reversed now though.

peaky2 · Post by **peaky2** » 10 Mar 2008, 16:14

I read this this morning in the ODAC newletter - quoted by Dr Birol of the IEA on the 2nd of March in The Independent:

"What will all this mean for the price of petrol? The indications are that if the producers don't bring a lot of oil to the markets, we may see very high prices ? perhaps oil at $150 a barrel by 2030. If the governments do not act quickly, the wheels may fall off even sooner."

2030

I laughed hard this morning. I'm larfing like a drain now having seen the BBC this afternoon...

peaky2 · Post by **peaky2** » 10 Mar 2008, 16:17

Actually, I've realised that maybe he was using the 24 hour clock and he just meant half past eight

Blue Peter · Post by **Blue Peter** » 10 Mar 2008, 16:18

peaky2 wrote:I read this this morning in the ODAC newletter - quoted by Dr Birol of the IEA on the 2nd of March in The Independent:

"What will all this mean for the price of petrol? The indications are that if the producers don't bring a lot of oil to the markets, we may see very high prices ? perhaps oil at $150 a barrel by 2030. If the governments do not act quickly, the wheels may fall off even sooner."
2030 I laughed hard this morning. I'm larfing like a drain now having seen the BBC this afternoon...

Perhaps he means half past eight?

Peter.

emordnilap · Post by **emordnilap** » 10 Mar 2008, 16:23

peaky2 wrote:I read this this morning in the ODAC newletter - quoted by Dr Birol of the IEA on the 2nd of March in The Independent:

"What will all this mean for the price of petrol? The indications are that if the producers don't bring a lot of oil to the markets, we may see very high prices ? perhaps oil at $150 a barrel by 2030. If the governments do not act quickly, the wheels may fall off even sooner."
2030 I laughed hard this morning. I'm larfing like a drain now having seen the BBC this afternoon...

Has to be some kind of typo, doesn't it? Perhaps he left a nought off the price. No, honestly! At least people like him are bringing the notion of scarce, expensive energy out into the open at last:

The really important thing is that even though we are not yet running out of oil, we are running out of time.

RevdTess · Post by **RevdTess** » 10 Mar 2008, 16:27

New high WTI 107.75

SunnyJim · Post by **SunnyJim** » 10 Mar 2008, 16:28

Brilliant isn't it??? Looks like investors and newly avaliable investment vechicles are allowing pension plants to invest directly in commodities.

I think if enough investement in commodities continues then maybe, just maybe we will start pricing the natural commodities this planet has to offer more realistically. When oil reaches $500 or $1000 dollars a barrel we'll be starting to getting there. I'd say a barrel of oil should really be worth about a years average wage wouldn't you???? And how much for food? The rest of your money???

Vortex · Post by **Vortex** » 10 Mar 2008, 16:33

Tess wrote:New high WTI 107.75

Surely this rapid change can only be due to the US economy approaching the event horizon?

'Simple' supply & demand worries wouldn't work this quickly, would they?

SunnyJim · Post by **SunnyJim** » 10 Mar 2008, 17:19

From the Financial Times.

The Financial Times wrote:The second source of demand we can label ?investment demand?. It is not just industrial and agricultural producers or jewellers, demanding these commodities: increasingly, they are seen purely as an investment in their own right.

The introduction of exchange-traded funds alone, which makes it as easy and as cheap to trade commodity futures as it is to trade stocks, has opened the world of commodities to more investors.

Moreover, commodities provide returns that are not correlated with stocks or bonds. This makes them very valuable for asset allocators looking to improve their risk-adjusted return, and there has been a steady drumbeat of pension funds and large institutions entering the commodities market for the first time.

This new investment demand has pushed prices upwards. The remarkable upward spike since last August also suggests that commodities do have a relationship with other assets ? as investors despair of returns from stocks and worry about inflation in the US, they buy commodities.

Tim Lee, of pi Economics, dismisses the commodities ?bubble? as ?simply a reflection of a speculative shift of funds?. Implicitly, they are betting on stagflation ? recession in the US and rising commodity prices.

This might explain the breakdown in the correlation between prices and economic activity which has held good since 1980 ? we have not suffered stagflation in that period. In the stagflationary 1970s, high commodity prices coexisted with a recession.

Apart from demand, there is supply. When the commodities boom began to gather force in 2002, it was a demand-led phenomenon. Opec?s production of crude oil, for example, rose from 25m to more than 32m barrels per day from 2002 to 2006, even as its price quadrupled. Further, a fall in prices in 2006 coincided with a dip in supply.

What has happened since the beginning of last year is more ambiguous. The oil price has more than doubled, but production has only increased slightly and remains below the peak levels recorded in 2005. Production from important non-Opec producers such as the US, the UK, Norway and Mexico has fallen markedly.

Tim Bond, head of global asset allocation at Barclays Capital, says that ?natural resource markets are delivering a supply shock of dimensions unseen since the 1970s?. Wheat and corn stocks are at their lowest levels, as a proportion of annual consumption, since the early 1970s. Copper stocks, judged this way, are at their lowest since 1990.

If this argument is right, then the logical conclusion is stagflation. Prices will go up, because supply constraints will force them up and the world will have to pay them.

RevdTess · Post by **RevdTess** » 10 Mar 2008, 17:33

107.84

emordnilap · Post by **emordnilap** » 10 Mar 2008, 17:40

... and Louisiana Sweet is bumping its head on $110...$109.73

Vortex · Post by **Vortex** » 10 Mar 2008, 17:52

Tess wrote:107.84

I suppose such a rapid rise without any major trigger event dramatically increases the chance of a dramatic fall Real Soon Now.

RevdTess · Post by **RevdTess** » 10 Mar 2008, 18:11

108.17