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View Poll Results: Oil was $145, now is $136. What will it be Friday 7/11?
$110 22 6.73%
$128 38 11.62%
$136 19 5.81%
$145 40 12.23%
$160 19 5.81%
$200 33 10.09%
7/11? mmmm..... slurrrpppeeee 156 47.71%
Voters: 327. You may not vote on this poll

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Old 07-08-2008, 03:50 PM   #1
plunk10
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Default Oil futures fell almost $5 today, and over $9 in past 2 days

........ So its at $136.50 per barrel. Why do I have a gut feeling it'll skyrocket to $160 per barrel this Friday. Oh because last time oil fell like this, it shot up to record levels again within a few days.

Still, if oil prices were to drop to $120 tomorrow and stay there, I bet people wouldn't notice a difference at the pump until September.

Here's the article I read.
http://money.cnn.com/2008/07/08/mark...ion=2008070815


BTW, I hear a lot of naysayers, but I'm still believing oil will drop below $100/barrel and stay there (at least for a couple months) before the end of 2009. Who else is with me?
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Old 07-08-2008, 03:51 PM   #2
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i say it falls to around $110 before too much longer.
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Old 07-08-2008, 03:55 PM   #3
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damn i can only hope it falls.
Feeding my scooter is getting god damn expensive. Upwards of 5.50 every 150 miles
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Old 07-08-2008, 04:01 PM   #4
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is this the one step back two steps forward approach?
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Old 07-08-2008, 04:03 PM   #5
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It will fall as long as there are no excuses like weather or terrorist to hike it back up
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Old 07-08-2008, 04:03 PM   #6
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Quote:
Originally Posted by vapore0n View Post
is this the one step back two steps forward approach?
Yep...

Then, after it peaks, it'll go down by about $0.07/gal, and people will "appreciate it".

DRum
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Old 07-08-2008, 04:04 PM   #7
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You're throwaway polling option was too hilarious to pass up. It got my vote.
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Old 07-08-2008, 04:10 PM   #8
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Quote:
Originally Posted by xenocide View Post
It will fall as long as there are no excuses like weather or terrorist to hike it back up
http://www.nhc.noaa.gov/
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Old 07-08-2008, 04:12 PM   #9
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Quote:
Originally Posted by xenocide View Post
It will fall as long as there are no excuses like weather or terrorist to hike it back up
hmmm... hurricane Bertha? oh wait, we don't have any oil rigs out there in Bermuda.
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Old 07-08-2008, 04:14 PM   #10
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HOW BOUT YOU SHOVE A OIL BARREL UP YOUR ASS.
SIDEWAYS.
WITH NO LUBRICATION.


chris619
dr_wheel


Full_Clip would be interested in this thread if he actually traded oil futures.
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Old 07-08-2008, 04:15 PM   #11
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From one speculative bubble to another...

Does the oil market seem similarly close to past super bubbles (tech and housing)?

Short the hell out of oil...
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Old 07-08-2008, 04:18 PM   #12
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For some reason I desire a Slurpee...
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Old 07-08-2008, 04:20 PM   #13
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Yeah, they've been predicting this. It is way too enticing to hold back production at these prices. They will end up flooding the market and then they'll have surplus.
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Old 07-08-2008, 04:38 PM   #14
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I'm looking for oil to hold around $145 until after Labor Day. Then, crude should ease a bit and heating oil/diesel should rise slightly in preparation for winter heating oil demand.

All bets are off if a major hurricane hits the Gulf, though.
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Old 07-08-2008, 04:43 PM   #15
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interesting article I saw on Digg today

Quote:
Since 2003, worldwide oil prices have quadrupled. According to a new study, the price of oil is rising at a faster-than-exponential rate, and cannot be sustained. In other words, we’re in the midst of an oil bubble, say researchers Didier Sornette and Ryan Woodard of ETH Zurich in Switzerland and Wei-Xing Zhou of the East China University of Science and Technology in Shanghai, China.
By analyzing oil prices over the past four years, the researchers have demonstrated more support for the hypothesis that the recent oil price run-up has less to do with supply-demand interplay and more to do with speculation.

In their analysis, the team gathered data on oil prices since 2005 in US dollars, euros, and other major currencies (to confirm that the results are not a consequence of the weakening of the US dollar). They also examined worldwide oil supply and demand data, specifically investigating the extent of increased demand from emerging markets such as China and India.

Then, the researchers analyzed this data using a method that Sornette’s group started to develop in 1996 that identifies bubbles as “transient superexponential regimes” – basically, areas of rapid growth that occur due to a source of positive feedback within the system. The scientists looked at the data in the context of three different models, and all three models revealed the existence of a “log-periodic power law,” in mathematical terms – in other words, a bubble. In economic terms, the researchers explain, a bubble refers to a situation in which expectations of future price increases cause prices to temporarily rise without justification from fundamental valuation.

Further, the models showed that the bubble is close to a local peak, and we may have even reached the peak already. On the other hand, the researchers noted, this critical peak may also be embedded in a larger-scale bubble, one that could develop in the coming months and years.

“The most fundamental difficulties [in trying to describe oil prices] lie in the operational definition of a ‘bubble,’” Sornette told PhysOrg.com. “There is no consensus. One standard definition is ‘exponential growth of price.’ But exponential growth of price is normal in economics, because it just corresponds to a constant growth rate. Our definition is ‘faster-than-exponential' growth of the price, which is necessarily unsustainable.”

The team also identified several particular characteristics of oil price dynamics that may help researchers understand the causes of the bubble. First, in the years 2004 and 2005, worldwide supply, demand, and price all increased together. In early 2006, supply started to drop, followed a few months later by a drop in demand, and six months later by a drop in price.

Around this time, from mid-2006 to early 2007, supply and demand fluctuated. Then, supply, demand, and price rose together, and have been continuing to rise through the most recent data point, which was taken in early 2008.

A comparison of supply and demand showed that, most recently, supply has been exceeding demand by more than a half million barrels per day. Meanwhile, the price continues to increase. Since it appears that the supply-demand balance has only a small effect on the price of oil, the researchers suggest that a major effect lies elsewhere. They point out several reasons why speculation, fed on rumors of rising oil scarcity, may be the positive feedback causing high oil prices.

As one motivating factor, investors could be searching for a new high-return investment following the collapse of three recent economic bubbles in the US (communication technology, which peaked in 2000, real-estate in 2006, and sub-prime mortgage lending in 2007). Also, speculation may have increased due to the deregulation of oil futures in the US in early 2006, corresponding to the fluctuations that occurred shortly after that time. Investors may also be concerned about a weakening US dollar, which may encourage protective hedging against future oil price increases.

“I expect rather soon some calming with a correction of the price,” Sornette said when asked about his prediction of future oil prices. “But it seems that, for the medium term, one has to be bullish on oil.”
http://www.physorg.com/news134646313.html


and then, from a futures trading newsletter I subscribe to

Quote:
An Open Letter to Congress

From John J. Lothian


When futures prices go up, they are advertising for selling. When prices go down, they are advertising for buying. With futures prices going up for crude oil and many other commodities, a truth has emerged in the cash markets that we have not grown our farming, drilling, mining or processing capacity to meet the increasing demand of a developing global economy. High commodity prices are sending an important message.

We need to listen to that message and respond.

We need to respond to higher prices with more selling. We need to find a way to meet the growing global demand with real production of oil, metals, grains, fibers and many other commodities. We need the higher prices to spur the investment in that production. This is a demand pull rally in prices, not a supply shock. We should not be shocked that millions of Chinese who work in factories in cities (rather than in agriculture in the country) need to buy food, transportation and clothing. This change in lifestyle has created a change in demand with higher wages and a rising living standards. Look at the label on the goods you buy and the clothes you wear and you can find similar economic /human migration stories in other countries around the world.

Laws artificially muting market prices will only make the problem worse. And messing around with a global problem in a narrow nationalistic way, especially in a way that exacerbates the problem, is the kind of thing that can lead to wars. People need to be fed, clothed and kept warm. They need transportation to get to work and move their goods and services around the world. History has shown free markets are the best mechanism by which this can be accomplished.

One of the tragic economic errors after World War I and causes of World War II was the rent control laws in Germany in the 1920s. With an upper bar on rent prices due to a well-intentioned but tragically flawed law, it was difficult to find housing. People would not move because they were locked in to a rent-controlled apartment. Landlords were forced to accept less than the open market would yield, and as a result they would let the apartments fall into disrepair because they could not afford to pay for the upkeep. New housing was not built, because the return on the controlled rents was less than the cost of capital to build it.

Listen to what the higher prices are telling us. We need more selling. More selling can come from new supplies, or from consumers switching from one choice to another. Higher prices spur changes in consumption. They create the economic conditions for new technologies, systems and ventures to emerge and compete. These are the ingredients of economic growth. Government should not pick the winners, the market should.

Some investors figured all this out before others. This spurred the development of an investment class in commodities, using futures contracts as proxies for the underlying physical products. Long-only commodity index funds have emerged as a major fundamental factor in the futures markets. Billions of dollars are linked to indices of commodities.

While traditionally these participants would be classified as “speculators,” they are in fact investors. Many of these funds fully fund each and every contract they buy. Margins on a $16 contract of soybeans might be $3000, but these investors are putting aside the full $80,000 to invest in these commodities on an un-leveraged basis.

These investors are putting their capital on the line, daring the market to find the selling to match their buying. There is nothing wrong or illegal in the way these market participants are using the futures markets. In fact, there is a lot that is right about it. Millions of investors use similar investing strategies to invest in other asset classes, including equities, fixed-income and real estate funds. The free flow of capital into this area is delivering an important message we need to heed. We need more selling. We need more production, processing and refining capabilities. We need to spur the market to allow alternatives to develop. We listen and respond to the market every day. This is no time to stop listening.

Proposals in Congress to raise the margins on futures contracts would have no impact on many of the long-only index funds as they have 100% in cash or equivalents of the contracts’ value. On the other hand, increased margins would reduce the number of traditional speculators. That would lead to less efficient markets, higher execution costs and generally higher prices.

When Treasury Bonds were introduced in the 1970s, the bid-offer in the cash market for Treasuries was regularly a full basis point wide, or $1000 between the bid and offer. The successful introduction of Treasury bond futures allowed that bid-offer to narrow to 1/32 or $31.25. Investors offered transparent, liquid markets can do more with their money.

Speculators come in different shapes and sizes, the same is true with hedgers. Commercial concerns are impacted by these higher prices and the accompanying volatility. Some hedges are held for months on end, and spiraling capital costs can kill a company. Some grain elevators have stopped taking forward-priced contracts because they can’t afford to finance the hedges for the farmers. This is a concern. Increased margins on market participants would only make this situation worse. We need more sellers, not less.

Speculators have often been vilified through the ages. In the current real estate crisis, many of the worst impacted areas for foreclosures were where the highest level of speculative activity occurred. Politicians publicly stated about how they wanted to help fix the problems in real estate but did not want to reward the speculators.

The first Treasury Secretary of the United States, Alexander Hamilton, was faced with a similar speculative situation in the early days of the republic. It seemed that many debts had been issued by the 13 colonies during the Revolutionary War to fund it. Original owners of the debt were often soldiers themselves, merchants or others. After the war, convinced these bonds would never be repaid by the colonies; many holders sold their holdings to speculators who paid pennies on the dollar.

Hamilton’s great plan was to nationalize all that debt of the new states and to issue new USA debt to replace it, thereby establishing a national debt market. By repaying the state debt, some owed to foreign holders too, he also raised the credit rating of the country in the world’s markets. However, in order to execute his plan, he had to handsomely reward the speculators who had accumulated the debt from the original buyers. Lucky for us that Hamilton did the right thing for the country and the hard thing to do politically.

As Congress contemplates how to respond to the political and economic risks we are faced with globally because of the jump in commodity prices, let’s remember the tragedy that sprung from German rent controls, the value of transparent, efficient and fair markets and the wisdom and political courage of Alexander Hamilton. Let’s remember higher prices mean we need more selling, not more regulation. Let us remember to listen to the market.
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Old 07-08-2008, 04:43 PM   #16
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Quote:
BTW, I hear a lot of naysayers, but I'm still believing oil will drop below $100/barrel and stay there (at least for a couple months) before the end of 2009. Who else is with me?
Never gonna happen...ever
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Old 07-08-2008, 04:47 PM   #17
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Some economists would argue that the price of barrels on the futures market really has little to do with what we pay at the pump, go figure
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Old 07-08-2008, 04:57 PM   #18
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oh hey another gas thread
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Old 07-08-2008, 05:11 PM   #19
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They had an interesting show on MSNBC i think showing old congress members and presidents dating back to 1980's saying we need to get off middle east oil. Yet in 2008 we have yet to do so

thanks US government. I want solar farms and wind mill farms so bad..
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Old 07-08-2008, 05:46 PM   #20
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Quote:
Originally Posted by Prevent View Post
They had an interesting show on MSNBC i think showing old congress members and presidents dating back to 1980's saying we need to get off middle east oil. Yet in 2008 we have yet to do so

thanks US government. I want solar farms and wind mill farms so bad..
http://www.cnn.com/2008/TECH/science...lan/index.html


There u go
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Old 07-08-2008, 06:56 PM   #21
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If they close the Enron Loophole on commodities trading, then prices on alot of goods should fall.

Quote:
Speculators and investment banks can game the energy trading markets, using loopholes in commodities law to drive up the cost of energy and reap record profits… at the expense of American families and small businesses!
http://www.stopoilspeculators.com/
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Old 07-08-2008, 07:07 PM   #22
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I'm not sure about it going back down to $100, but I could believe ~$120
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Old 07-09-2008, 12:05 AM   #23
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As demand from the far east increases, and as it becomes more difficult to get the remaining oil out of the ground, the cost will go up. If you think it's expensive now, wait a couple of years.

Best thing to do right now is to find yourself a decent Subaru Justy and fix it up.

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Old 07-09-2008, 01:26 AM   #24
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Quote:
Originally Posted by Skylab View Post
If they close the Enron Loophole on commodities trading, then prices on alot of goods should fall.



http://www.stopoilspeculators.com/

BINGO!!!
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Old 07-09-2008, 01:27 AM   #25
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WOOHOO! Another Gas/Oil thread!

There should just be another subforum for these threads.

Seriously.
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