Crude Oil

[Financially dependant]

A balanced article!

http://www.sharecafe.com.au/fnarena_...p?a=AV&ai=8548

[COLIN]

A balanced article!

http://www.sharecafe.com.au/fnarena_...p?a=AV&ai=8548

So I had to read through all that to get to the final sentence: "Where is the oil price headed? I have absolutely no idea!"

An informative read, nevertheless. At the end of the day we all have to make up our own minds - or keep them open!

[Dr_Who]

Good article.

If you have a look at the graph of OPEC production and oil price, you come to the conclusion that OPEC is pumping out oil at max levels, yet oil prices continues to go higher.

[Dr_Who]

Iran has now switched their oil trade to $EU and reducing oil output... ROFL! This will really pee off GW Bush. What a laugh.

Comments by BHP CEO points to clear evidence that Oil will stay high for this year and possible evidence of PEAK OIL.

BHP tips good oil on energy

http://www.news.com.au/heraldsun/sto...58-664,00.html

[bermuda]

So I had to read through all that to get to the final sentence: "Where is the oil price headed? I have absolutely no idea!"

An informative read, nevertheless. At the end of the day we all have to make up our own minds - or keep them open!

Oil goes higher....much higher.

[Mick100]

[quote=Mick100;189896][quote=Mick100;188159][quote=Mick100;182880][quote=Mick100;179432][quote=Mick100;177108][quote=Mick100;175583][quote=Mick100;173455][quote=Mick100;172436][quote=Mick100;171491][quote=Mick100;170570][quote=Mick100;169708][quote=Mick100;167752][quote=Mick100;166946]Commercial (hedgers) net shorts positions

price open interest
7/08/07 net short 117500 71.50
14/08/07 net short 85700 72.00
21/08/07 net short 42600 71.00
28/08/07 net short 25000 74.00
4/09/07 net short 34500 77.00
11/09/07 net short 36000 77.50
18/09/07 net short 44500 81.00
25/09/07 net short 45300 79.50

2/10/07 net short 59500 80.00
9/10/07 net short 66000 80.26
16/10/07 net short 78000 87.61
23/10/07 net short 60000 85.27 1,408,000
30/10/07 net short 77400 90.38 1,448,000
06/11/07 net short 84000 96.70 1,513,000
13/11/07 net short 23000 91.17 1,445.000
20/11/07 net short 29000 95.00 1,398,000
27/11/07 net short 54000 94.42 1,494,400
04/12/07 net short 45000 88.32 1.382,500
11/12/07 net short 38000 90.02 1.381,000
18/12/07 netshort 29125 90,08 1,330,250
24/12/07 net short 51000 94.13 1,326.000
31/12/07 net short 85100 95.98 1,361 000
08/01/08 net short 100500 96.33 1,414,000
15/01/08 net short 91000 91.90 1.458.000
22/01/08 net short 38400 89.21 1,343,200
29/01/07 net short 31000 91.64 1,366,000
05/02/07 net short 25000 88.41 1,368,500
12/02/07 net short 36900 92.78 1,393,000
19/02/07 net short 54200 99.70 1,355.000
26/02/07 net short 85800 100.88 1,406.000
04/03/08 net short 102,800 99.52 1,451.000
11/03/07 net short 97230 108.75 1,484 400
18/03/08 net short 70200 108.50 1,407,400
25/03/08 net short 52100 101.22 1,362,700
01/04/08 net short 40100 100.98 1,382.000
08/04/08 net short 49500 108.50 1,412,300
15/04/08 net short 47600 113.79 1,441,400
22/04/08 net short 40500 118.07 1,337.100
29/04/08 net short 37300 115.63 1,365,500
06/05/08 net short 24100 121.84 1,422,400
13/05/08 net short 39300 123.10 1,477,000
20/05/08 net short 19400 128.98 1,356,700

[Mick100]

nets shorts at their lowest number since I'v been keeping records (mid last yr)
oil prices are going higher - probably, much higher

[the machine]

nets shorts at their lowest number since I'v been keeping records (mid last yr)
oil prices are going higher - probably, much higher

mick, can you please elaborate a bit on what the data means - thanks

M

[SEC]

nets shorts at their lowest number since I'v been keeping records (mid last yr)
oil prices are going higher - probably, much higher

Another way to read this is that those who were shorting oil hard when it hit $100 got it wrong, very wrong and had to cover, pushing the oil price even higher.

So short covering may be contributing to the current oil price as well as speculators. Both point to a short term spike.

SEC

[Mick100]

mick, can you please elaborate a bit on what the data means - thanks

M

COT (commitment of traders) report

CRUDE OIL, LIGHT SWEET - NEW YORK MERCANTILE EXCHANGE Code-067651
FUTURES ONLY POSITIONS AS OF 05/20/08 |
--------------------------------------------------------------| NONREPORTABLE
NON-COMMERCIAL | COMMERCIAL | TOTAL | POSITIONS
--------------------------|-----------------|-----------------|-----------------
LONG | SHORT |SPREADS | LONG | SHORT | LONG | SHORT | LONG | SHORT
--------------------------------------------------------------------------------

243,548 193,318 202,940 827,582 847,025 1274070 1243283 82,587 113,374

CHANGES FROM 05/13/08 (CHANGE IN OPEN INTEREST: -120,350)
-19,830 1,707 -25,280 -76,982 -96,911 -122,092 -120,484 1,742 134

PERCENT OF OPEN INTEREST FOR EACH CATEGORY OF TRADERS
18.0 14.2 15.0 61.0 62.4 93.9 91.6 6.1 8.4

NUMBER OF TRADERS IN EACH CATEGORY (TOTAL TRADERS: 334)
95 123 131 84 99 267 276


I'll point out the relevant info

non commercial (large traders/speculators)
long 243,548
short 193,318
spreads 202,940 (a spread is both a long and a short combined)

commercials (hedgers)
long 827,580
short 847.025
(hedgers are either buying or selling - spreads are of no use to them)

totals
long 1,274,070
short 1,243,283
===========================

large traders (non commercials) have a net long position of 50,230 contracts
hedgers (commercials) have a net short position of 19,445

============================

those reports or figures which I have been quoting weekly are only for the commercials (hedgers). I'm not interested in what the non commercials (large traders ) are doing because they are just momentum players who buy when prices are going up and sell when prices are going down.

The commercials, on the other hand, are the people who actually produce/sell physical oil and use/buy physical oil. These people are industry insiders and I am assuming that these people understand best the factors affecting the supply and demand for oil.

you may find it strange that I am so bullish on oil while the commercials are net sellers, ie, they have more contracts to sell oil than to buy. There's a good explanation for this pecularity which applies to nearly all commodities most of the time
If you put yourself into the position of a producer - you know what your costs of production are - you know what the spot price is for your oil - by selling foward (futures) you are able to lock in your profit and provide certainty of income, thus reducing risk. So when spot prices are well in excess of production costs it's tempting for poducers to hedge future production in the futures market. If the spot price goes higher you lose out on some potential profit but your not going to go broke - you have locked in a good profit margin

now put yourself in the position of a buyer of oil
the risks of hedging are quite different to the buyer
If he locks in todays price in the futures market he may make good money if the price keeps increasing while he's locked in a lower buying price and can sell at the market price as with petrol. But what if the price goes down after he's locked in todays price. His unhedged competitors are able to lower their prices as their input prices fall. In short, our hedged buyer goes broke. So for the buyer to hedge is actually quite risky .

Add to this the fact that producers are price takers - they accept the market price - they cannot pass on cost increases to the customer. On the other hand
fuel retailors are price setters - they can pass on higher costs (of oil) to the consumer

to cut a long story short, the incentive to hedge are much stronger for the producer than for the buyers of oil - this is why commercials are nearly always net sellers (net short)