Crude Oil

[Huang Chung]

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

Anton Tagliaferro from Investors Mutual was saying on Inside Business this morning that the rapid movement in the oild price is not just a supply / demand issue (which counters Boon Pickin's recent commentary).

Extract from Inside Business:

ALAN KOHLER: The stockmarket is up about 15 per cent from it's lows in mid March. Are you just happy or are you worried or a bit of both?

ANTON TAGLIAFERRO: Look it's always a relief when the market goes up and I think that's what it's been, it's been a relief rally, you know.
Many of the issues that were around that caused the correction in the first place, you know, they haven't gone away.
Clearly the bail out of Bear Sterns gave some confidence in financial markets that further, you know financial institutions won't fall over.
But clearly, you know, the housing market in the US continues to fall away.
You know, the higher commodity prices aren't helping in terms of helping the consumer, helping economic growth going forward. So we think it's going to be pretty choppy, you know.
And again if you look at the corporate earnings outlook going forward, the resource sector aside, which by the way, I think a lot of the commodity prices are being buoyed by huge speculative buying, there's no doubt about it when you see the oil price moving four dollars in one night, that's not a supply demand adjustment, and then falling two the next.
You know, that's obviously some large speculative funds in there.

[the machine]

mick100 - thanks for the elaboration

regards

M

[Mick100]

[quote=Mick100;202234][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
27/05/08 net short 11170 128.85 1,338.900
03/06/08 net short 19660 124.31 1,355,600
10/06/08 net short 13930 131.31 1.418,750

[Mick100]

net shorts still falling while price increasing - extremely bullish

forget about what the speculators are doing - commercials are sensing a coming shortage

looking for an explosive move to the upside in coming weeks

[Financially dependant]

Another nice short video on current oil situation.

http://finance.yahoo.com/tech-ticker...OW,JCG,ROH,DUG

stolen from T.O.D

[Mick100]

net shorts still at very low levels

oil should continue moving higher

[upside_umop]

hey mick,

this 'net shorts,' is this stating the obvious that more people are holding short positions on oil than long?

[Packersoldkidney]

I expect oil to be trading at $75 a barrell by the end of next year. That is the very top of the range I expect to be trading in. To me, the technical signs are mixed - however failure to breach $140 would be a short term bearish sign - however in this bubble phase any upwards price is possible.

The number of oil contracts traded has increased 20 fold since when oil was $58 a barrell - yet the demand for oil has basically remained static during that time - and now oil is over US $130 a barrell.

In other words, a huge amount of the increase in the price of oil is down to speculation.

Oil traded at US $40 a barrell in 1980 - in 1986 it traded at US $6 a barrell. I expect a fall in the price of oil of similar magnitude in coming years.

[jonathan76]

I expect oil to be trading at $75 a barrell by the end of next year. That is the very top of the range I expect to be trading in. To me, the technical signs are mixed - however failure to breach $140 would be a short term bearish sign - however in this bubble phase any upwards price is possible.

The number of oil contracts traded has increased 20 fold since when oil was $58 a barrell - yet the demand for oil has basically remained static during that time - and now oil is over US $130 a barrell.

In other words, a huge amount of the increase in the price of oil is down to speculation.

Oil traded at US $40 a barrell in 1980 - in 1986 it traded at US $6 a barrell. I expect a fall in the price of oil of similar magnitude in coming years.

I disagree, "statistics showed sales of motor vehicles of all types hit a record 1.68 million units in China, up by 600,000, or 58.8%, compared with a year ago. Meanwhile, car output also jumped 51.5% to 1.75 million units for the first four months. Strong sales boosted auto makers' profits. According to the NDRC, the auto industry's profits in the first quarter of this year soared 87.4% from a year before to reach 15.3 billion yuan. "

http://www.atimes.com/atimes/China_B.../HE18Cb05.html

above is only one of many statistics showing the demand of car in china alone outstrip the supply of petrol worldwide every week. What saudi arabia has decided to increase production by 500000 barrels a day will easily be outstrip by china's car production in a month or two.

The main problem is the cars are made cheaply by local car manufacturers in china that build cheap petrol hungry cars

[Packersoldkidney]

I disagree, "statistics showed sales of motor vehicles of all types hit a record 1.68 million units in China, up by 600,000, or 58.8%, compared with a year ago. Meanwhile, car output also jumped 51.5% to 1.75 million units for the first four months. Strong sales boosted auto makers' profits. According to the NDRC, the auto industry's profits in the first quarter of this year soared 87.4% from a year before to reach 15.3 billion yuan. "

http://www.atimes.com/atimes/China_B.../HE18Cb05.html

above is only one of many statistics showing the demand of car in china alone outstrip the supply of petrol worldwide every week. What saudi arabia has decided to increase production by 500000 barrels a day will easily be outstrip by china's car production in a month or two.

The main problem is the cars are made cheaply by local car manufacturers in china that build cheap petrol hungry cars

The percentage use of oil used in motor cars is really quite fractional compared to its other uses, at least in parts of the world apart from North America - China is also cutting back its subsidies for oil, as are other parts of Asia: oil is just too expensive to subsidise.

The Chinese may well be producing a lot of cars, but a global recession will quickly knock that on the head and send the majority of them back to rickshaws.

I think oil, when you discount what is obviously now a bubble in the commodity, will continue to rise in the long term - I just think that at the moment oil is well over-done and due a fairly nasty correction. You can point to fundamentals, but fundamentals are an erroneous way to look at things at this point in the cycle - it is obvious the price of oil has become completely detached to the underlying economics of the situation. Demand just hasn't increased all that much recently - and is basically the same it was when oil was under $60 US a barrell - let alone what the current price is doing to demand (ie, softening it).

There are always 'fundamental' reasons why a bubble can keep on getting bigger - there was with tech stocks back in 2000, with housing in 2004/5, and probably with the tulip mania back in 1637. Every bubble provides reasons why it can keep on expanding. History, however, should tell you something different. Every cycle has its boom phase, and then it has its bust phase.