Commodities and Oil pull back - Is it happening?

[Footsie]

I think we are now starting a meaningful pullback in Commodities and CrudeOil

But I believe it to be a bull market pullback.

[Footsie]

out of the resource spec's that i've accumlated in the last 2 months i've now sold all but 2 of them.

[Dr_Who]

Commodities - Yes

Oil & Gas - No

I only hold one commodity stock - ADY. Just sold LST.

I am still buying oil and gas stocks in Aussie. Thanks to Opes Prime, still a number of under valued oilers.

[tommy]

I am still bullish on oil, gas, iron ore, coal and phosphate/potash. Might throw in uranium soon too.

I think this is a temporary correction at best to preserve the long-term bull run. But then again, oil has gone totally out of hand... wouldn't be surprised to see it plummet either.

Conclusion: I have no idea! :-P

[Dr_Who]

UPDATE 1-IEA says optimistic to think oil price will fall much

Tue May 27, 2008 4:42pm BST

BERLIN, May 27 (Reuters) - It would be "very, very optimistic" to assume oil prices will fall much in the next few years, the chief economist at the International Energy Agency (IEA) said in a interview with German TV published on Tuesday. "The markets are very tight now and the result of this tightness is the very high prices," IEA chief economist Fatih Birol was quoted as saying by German state broadcaster ZDF.

"And when we look a couple of years ahead, we should be very, very optimistic if we would believe that the current oil prices will go substantially down," he said.

"They can possibly go a couple of steps downwards but to expect that they will go substantially down to the price we´ve seen in the past, is maybe too optimistic."

Oil prices in the United States have climbed about 40 percent this year to an all-time high of $135.09 per barrel last week CLc1, driven by an extended slide in the value of the dollar. On Tuesday oil dropped back below $130 a barrel.

(Reporting by Iain Rogers) (Editing by George Obulutsa)

http://uk.reuters.com/article/oilRpt/idUKL2768414120080527

[trackers]

I'm 100% cashed as of today, looking for some asx oiler bargains. Might watch the rest of the week from the sidelines

[Financially dependant]

The US driving season has just started, keep an eye on the US oil reserves if they can start increasing the reserves, then the supply is keeping up and price could go down but I doubt either will happen!

Oil going up again!

[Dr_Who]

Some profit taking after oil have had a fantastic run? I think so.

http://futures.tradingcharts.com/charts/BCW.GIF
http://futures.tradingcharts.com/charts/BCW.GIF
http://futures.tradingcharts.com/charts/BCW.GIF

[Mick100]

can't see oil falling below $125

I wouldn't be surprised to see oil spike soon to 150 - 160

the only people who should cash up now are those who are not invested in commodity related cos

[winner69]

Oil futures currently in a contango state and this often provides an incentive to buy it now and just store it ..... maybe happening as there reports of tankers just sitting around full of oil with no intention of unloading yet ... and this as lead to a tanker shortage as well.

Such a condition often leads to a sudden drop in price ... just like overbought equities ..... but whatever the short term brings agree with Mick there is a pretty good chance that 150-160 might be seen soon

[remy]

im a bit of a petrol head so dont really mind to much if oil falls, however ive also hold 4 oil stocks :/

[The Big Ease]

great article....

http://www.timesonline.co.uk/tol/comment/columnists/simon_jenkins/article3998908.ece

[Dr_Who]

Oil Rises After Morgan Stanley Says Brent Oil May Reach $150

By Mark Shenk
May 28 (Bloomberg) -- Crude oil rose more than $2 a barrel after Morgan Stanley said that Brent oil from the North Sea could ``easily'' reach $150 a barrel.

Prices are rising because ``supply constraints are biting against the backdrop of still-strong global demand,'' Richard Berner (http://search.bloomberg.com/search?q=Richard%0ABerner&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1), co-head of global economics at Morgan Stanley, said in a report today. Oil rose last week after Societe Generale SA and Credit Suisse increased their price outlooks.

``When these price forecasts come out, traders don't want to be short, so they are in a way self-fulfilling prophecies,'' said Sarah Emerson (http://search.bloomberg.com/search?q=Sarah+Emerson&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1), managing director of Energy Security Analysis Inc., a consulting firm in Wakefield, Massachusetts. Shorts are bets that prices will fall.

Crude oil for July delivery rose $2.18, or 1.7 percent, to settle at $131.03 a barrel at 2:51 p.m. on the New York Mercantile Exchange. Oil climbed as high as $131.58 and fell as low as $125.96 today. Futures reached $135.09 on May 22, the highest since trading began in 1983.

``Prices are swinging wildly back and forth, which indicates that the market needs to find equilibrium,'' said Kyle Cooper (http://search.bloomberg.com/search?q=Kyle+Cooper&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1), director of research at IAF Advisors in Houston.
Brent crude oil for July settlement rose $2.62, or 2 percent, to settle at $130.93 a barrel on London's ICE Futures Europe exchange. The contract touched a record $135.14 on May 22.
Oil advanced above $127 for the first time on May 16 when Goldman Sachs boosted its estimate for the second-half of the year to $141 a barrel, from $107, citing supply constraints. Goldman analyst Arjun N. Murti (http://search.bloomberg.com/search?q=Arjun+N.+Murti&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1) wrote in a report on May 6 that ``the possibility of $150-$200 per barrel seems increasingly likely over the next six-24 months.''
$150 Brent
``While prices are high enough to curb demand in the developed economies, we think that supply limits could easily take Brent crude quotes to $150 a barrel,'' Berner, who is based in New York, said in the report. Morgan Stanley is the second- biggest U.S. securities company.
The Movement for the Emancipation of the Niger Delta, Nigeria's main militant group, threatened attacks and car bombings tomorrow in the Niger Delta to mark the first anniversary of President Umaru Yar'Adua (http://search.bloomberg.com/search?q=Umaru+Yar%26%2339%3BAdua&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1)'s inauguration.

MEND, which has shut down about 20 percent of Nigeria's oil production (http://www.bloomberg.com/apps/quote?ticker=OPCRNIGE%3AIND) since February 2006, has increased its assaults on the country's oil infrastructure since April. Nigeria was the fourth- biggest source of U.S. oil imports (http://www.eia.doe.gov/pub/oil_gas/petroleum/data_publications/company_level_imports/current/import.html) during the first three months of this year, according to the Energy Department.

Dow Chemical Co (http://www.bloomberg.com/apps/quote?ticker=DOW%3AUS)., the largest U.S. chemical maker, will raise prices on all of its products as much as 20 percent because of surging costs for energy, raw materials and transportation.
The increases are needed after a 42 percent jump in first- quarter spending on raw materials and energy, Chief Executive Officer Andrew Liveris (http://search.bloomberg.com/search?q=Andrew+Liveris&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1) said today in a statement. The increases take effect on June 1, Midland, Michigan-based Dow said.

Dow is trying to pass on higher costs amid company forecasts that spending on energy and hydrocarbon-based ingredients will climb to $32 billion this year, a fourfold increase from 2002.

To contact the reporter on this story: Mark Shenk (http://search.bloomberg.com/search?q=Mark+Shenk&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1) in New York at mshenk1@bloomberg.net.
Last Updated: May 28, 2008 15:39 EDT

[Hoop]

Oil futures currently in a contango state and this often provides an incentive to buy it now and just store it ..... maybe happening as there reports of tankers just sitting around full of oil with no intention of unloading yet ... and this as lead to a tanker shortage as well.

Such a condition often leads to a sudden drop in price ... just like overbought equities ..... but whatever the short term brings agree with Mick there is a pretty good chance that 150-160 might be seen soon

Contango markets usually happen when commodity prices are in a downtrend, its not an unusual occurrence.... Oil isn't in a downtrend so this present contango is less common.

At the moment, oil is the Medias hot topic, and in the short term it is difficult to work out exactly what is actually happening as everyone seems to have a differing opinion.

My personal view
Is Oil in big demand???........... From my research the answer is a frustrating Yes and No.

...so I went to plan B... finding figures on oil tankers delivering oil. An interesting set of events popped up. Certain localised areas had huge fuel prices rises due to severe shortages of Oil...(other areas no price rises and plenty of oil due to Government subsidies) The places where there were shortages were due to the following factors, striking action of workers demanding their part of the huge profits being made. Striking areas were oil tankers at sea, oil refinery plants, and petrol tanker drivers. Nigeria at production source, a leak on North sea rigs shutting production down are small counterbalances. Apart from Nigeria, North Sea, this logistic hiccup is causing a build up of oil quantity between coming out of the ground and to the local garage fuel pumps, hence full oil tankers floating idle at sea or stored in reservoirs. So with all this surplus crude floating around (pun) why hasn't the price of crude dropped or oil pumping slowed to correct this situation??...Yep you guessed it, leaving the strikers out of it, the new breed called Index Speculators have bought up this surplus and are storing some of it on the same tankers that are floating around. Much of it is also stored at source such as Venezuela and Iran waiting for the prices to increase more (causing this unusual contango effect)
The result of all this is that the Oil market has disconnected with itself due to very short term problems all happening at the same time (all the ducks have lined up together). Oil is still pumping at near maximum as the oil market sees a deficit signal and the price is reacting to this so called severe shortage.

So when you read the papers and see oil industry experts contradicting themselves...who right? sadly they all are.

Should these Index Speculators (trust funds managers and countries [Iran etc]) be regulated to bring the oil price back in line with market production levels...To stop market aberrations in theory the answer is Yes, but now is not the time and it may never be the right time ..so the answer is no. Why??.. if the Global Governments and Commodity markets regulate at this very moment, they risk a flood of oil hitting and destabilising the market. Index Speculators are estimated to be storing 8 times more oil than the USA, and just a small premature release of this storage due to hasty Governmental intervention may create a snowball rolling downhill effect on the oil markets.
The market, if left to its own devices, will probably settle...but I have my doubts..because of this modern day fad.."managed bubble economics"

Note for posters: what I have written here is my personal view and is based on short -term situation. The short/ medium term outcome is unknown and with the Oil market in a state of flux, variables are changing every day, thus making this post outdated very quickly. However it serves as another point of view to join a collection others have written in various medias.

As for the longer term, oil is a finite commodity and rising demand on a limited production must put upward pressure on price.

Ref:
http://www.silobreaker.com/DocumentReader.aspx?Item=5_860487944
http://www.shanghaidaily.com/sp/article/2008/200805/20080526/article_360815.htm
http://www.mcadforums.com/forums/files/michael_masters_written_testimony.pdf
http://www.guardian.co.uk/business/2008/may/04/oil.energy
http://www.incrediblecharts.com/tradingdiary/trading_diary.php
http://www.world-check.com/articles/2008/05/09/iran-venezuela-use-oil-tankers-manipulate-gliobal-/
Sharetrader posts


Disc: sold down and now out of NZO, for now (50+% profit:))

[tricha]

Hoop - "Disc: sold down and now out of NZO, for now (50+% profit:))"

I must have bought yours, NZO way to cheap.:p Its going to be a $3.00 stock in a year from now. Probably the only NZ stock worth owning.

[Hoop]

Hoop - "Disc: sold down and now out of NZO, for now (50+% profit:))"

I must have bought yours, NZO way to cheap.:p Its going to be a $3.00 stock in a year from now. Probably the only NZ stock worth owning.

"I must have bought yours,......" may have, check them for finger prints:D
Hey Tricha if they are mine remember they are on loan, I will want them back shortly.:D:D

[trackers]

Hoop - "Disc: sold down and now out of NZO, for now (50+% profit:))"

I must have bought yours, NZO way to cheap.:p Its going to be a $3.00 stock in a year from now. Probably the only NZ stock worth owning.

A year from now being the operative words there... Not going anywhere til 1 July I'm afraid (when I'll rebuy my NZO shares lol)

[lakedaemonian]

As stated before, I'm WAY bullish on energy and most commodities....so I'm obviously biased

We saw a recent pullback on Gold & Silver which provided another decent buying opportunity for the true believers, I reckon the same is possible for Ag and Energy, but less so in my opinion due to their necessity.

I perceive Energy and Ag commodities as demand AND inflation driven......with growing wealth and improving standards of living(and the higher food/energy consumption that typically entails) in China/India and elsewhere driving demand as well as the continued debasement of the US Dollar I don't see this trend changing for the foreseeable future.

A short-term dollar rally and/or a developing world economic hiccup are the only things I see creating any friction for a continued commodity bull run.

Just my opinion.

[Dr_Who]

Would the strengthening of the $USD also benefit the Aussie oilers and miners? Even with weakness in oil price, the oilers will benefit from the exchange rate. Your thoughts?

[lakedaemonian]

Would the strengthening of the $USD also benefit the Aussie oilers and miners? Even with weakness in oil price, the oilers will benefit from the exchange rate. Your thoughts?


I would think so....assuming the USD strengthens against the Aussie, rather than just against the Kiwi.

Something to also consider in regards to investing in commodity focused companies, as opposed to investing in just the underlying commodity, is that IF an Aussie oiler sees increasing revenue(in Aussie dollars) from say BOTH rising oil prices AND a declining Aussie costs/overheads would likely balloon as well.

Am I wrong?

Or would ballooning costs be outweighed by rising revenue?

Would it be worth considering the possibility of a comeback in oil prices AND continued strength in the Aussie/USD cross as a possible pessimistic view on Aussie oilers?