Oil Prices: Up Up and Away?

[GO DAWG GO]

I know this is getting VERY old...But why are oil prices going up in the last few days. Todays crude up $5 bucks a barrel so far. Is this the beginning of the hedging machine that will run it up until it finishes us off for good?

With that recent big find in the Dakota's, seems odd with the world economy as it is that oil price would be going up. Unless oil producers are anticipating a worthless dollar?

Sammy- What is your take?

High oil prices make me nervous!

Bob

[jyl]

Look at chart of oil px over past year. Don't show oil px running up and away, merely coming off Feb weakness to levels of Jan. Potentially a bottom made in Feb but really too early to say that.

Reason for trading behaviour - latest data showed some recovery in US miles driven, talk about more OPEC production cuts, some incremental optimism on China economy (note FXI best-acting of all global stock markets), probably some other things I didn't notice. Edit - I'm told last 2 weeks inventory data was also incrementally better (less/no invtry build).

What do you mean by "high" oil prices? $40 is not high, even $70 is not high.

Longer-term, projections I've seen show global supply exceeding demand through 2010, then supply flattening out so if demand recovers and continues rising should be upwards pressure on price. Severe global recession hitting demand hard, low oil prices hitting development of new fields but that takes years to show up in reduced supply, little impact on current supply.

I have not been betting (either long or short) on oil for some months. So not super current on the analysis. But anyway I think oil exceeds $100 in 2-3 years.

[jyl]

Also, Dakota oil find (Bakken) is really pretty irrelevant to global oil price. This was discussed in PPOT around six months ago. Headline "200BN barrels" is B.S., recoverable barrels likely to be much smaller. Brazilian deepwater finds are much larger in recoverable terms.

Anyway, the current oil px is not being driven off long-term supply, incl finds that won't yield signif barrels for many years. It is being driven off expectations for near-term global oil demand.

[GO DAWG GO]

John,

What about the "Big find" in the Dakota's that geologists claim is larger than the pools in Saudi? I heard property values in proximity to those pools is inflating because oil companies are buying the land and setting up the rigs. I would think purely speculation of the potential glut of crude on the market from domestic pumping would drive the price down.

Gasoline prices have also increased over the last few months proportionately with crude prices. 3 months ago, regular in LA was $1.70 a gallon and now $2.30 with crude stable below $40.

Isn't this kind of the inverse to supply and demand?


Bob

[GO DAWG GO]

I was in the writing mode and didnt see your last reply until I posted the previous post

Make sense?

Bob

[The Gaijin]

Originally Posted by GO DAWG GO

John,



Gasoline prices have also increased over the last few months proportionately with crude prices. 3 months ago, regular in LA was $1.70 a gallon and now $2.30 with crude stable below $40.

Isn't this kind of the inverse to supply and demand?


Bob

Apparently they are making less gas out of this cheaper oil and lessening the supply..

When it dropped to its $1.70 low - it was due to oversupply and was even cheaper than the price to produce it.

It really is time for a gas tax. We would all like to see a recovery in the economy - but using way less oil moving forward would be a good thing. The SUV and pick'im'up truck craze needs a final nail in the coffin.

[GO DAWG GO]

Gaijin,

Why do you want to increase taxes on anything at the moment? We are going to get taxed enough soon.

Tax revenue is like Cocaine, there will never be enough...IMO


Bob

[Racerbvd]

I think one reason might be the cost of replacing all the old storage tanks, I know some smaller stations stopped selling gas, some larger ones built bigger, new stations and those who did replace, are trying to live off store sales, which of course has to be way down.