Crude Oil

[Skol]

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.

As J.M. Keynes said: "Markets can stay irrational longer than you can stay solvent".

[Financially dependant]

It is good to see healthy debate on oil, as it deserves it!

Two issues I would like to bring up to add to the debate which I don't think have not been mentioned, one is the extra S.A. oil promised to come on stream is heavy sour oil, we already have plenty of it which the refiners do not want (not set up to handle, or to costly handle it).

The other issue is ELM (export land model), most of the increase in consumption is from oil exporting nations (Middle east, Venezuela, Nigeria et al) so there is less hitting international markets all the time.

There no doubt will be a peak of the price of oil and then it will drop away (not sure a bursting bubble analogy works for me) because of competition, but there is no alternative at the moment and will not be an alternative for some time.

[bermuda]

"Every market has its bust phase"

And oil will have its bust phase when the world has developed sufficient alternatives.....

At the moment we are 5-10 years away from that time.

What happens until then is very scary. And some of this is being played out now.

So start conserving now.Everyone.

[Dr_Who]

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.

Thats a pretty arrogant statement to make about the Chinese. China and India is currently holding up the global economy. In another 10-20 years China will take over America to be the largest economy in the world. India and China's infrastructure needs huge amount of upgrading and will require huge amount of resources to develop.

Unlike other oil bubbles in the past, this time round there is a fundamental demand coming from booming economies in Asia to sustain growth. The world is still in denial that there is a supply and demand problem. This is evident with American not addressing the fundamental problems they are having which is their huge appetite for oil. Instead of reducing consumption for oil, they are doing a witch hunt and pointing the fingers at others.

There will come a time for the oil price to peak and knows one knows when, unless you have a crystal ball. I say oil price will not come below $100 unless China has a market crash or a viable alternative to oil is discovered. In the meantime, investors like us are having a ball making great capital gains in the energy market.

[Packersoldkidney]

Thats a pretty arrogant statement to make about the Chinese. China and India is currently holding up the global economy. In another 10-20 years China will take over America to be the largest economy in the world. India and China's infrastructure needs huge amount of upgrading and will require huge amount of resources to develop.

Unlike other oil bubbles in the past, this time round there is a fundamental demand coming from booming economies in Asia to sustain growth. The world is still in denial that there is a supply and demand problem. This is evident with American not addressing the fundamental problems they are having which is their huge appetite for oil. Instead of reducing consumption for oil, they are doing a witch hunt and pointing the fingers at others.

There will come a time for the oil price to peak and knows one knows when, unless you have a crystal ball. I say oil price will not come below $100 unless China has a market crash or a viable alternative to oil is discovered. In the meantime, investors like us are having a ball making great capital gains in the energy market.

My statement was half tongue-in-cheek.

Anyway, everyone here seems to be bullish on oil, which to me is as good a contrarian indicator as any.

[Packersoldkidney]

As J.M. Keynes said: "Markets can stay irrational longer than you can stay solvent".

That's a fair statement, and I agree oil *could* go much higher from here - markets can be very irrational at times - but the underlying supply/demand situation is now disconnected. That should be obvious when oil rises $10 in one day.

[Financially dependant]

A little off topic but it gives an idea of what China is up to.

[jonathan76]

Another thought to put into the conversation.

I say the oil price will keeps going for a at least 5-10 years while the alternatives are being look at because of my personal experiences.

Every few years, I visit my relatives in china, every few years, the amount of spending money my relatives throw at luxuries and also car increase by 10 times or even more. The problem in China is that the population suddenly became middle class and rich with money to pour away like water. To them, petrol price is nothing as when their income increase ten times each year, the petrol cost only increase 1 time. That's also the reason why all my relatives change vehicle each year and each year the car is bigger and more petrol consuming.

We cannot compare the exploding market in china to other countries. In Australia, unless you work in the mine, your salary is peg to inflation and maybe you get 4.2% pay increment next year, in china, you get 1000% pay increment each year easily both through your employer and through bribery. One of my relative is a public servant who earns miserable pay but he bought two apartments worth $300k AUD in the past year alone and he spent AUD$200 each meal or at least when I visit him over the two weeks that I spent at his house. That's how rich the chinese are. Petrol price increases? He don't even know the prices increase at the petrol pump station!!!

[Financially dependant]

Another thought to put into the conversation.

I say the oil price will keeps going for a at least 5-10 years while the alternatives are being look at because of my personal experiences.

Every few years, I visit my relatives in china, every few years, the amount of spending money my relatives throw at luxuries and also car increase by 10 times or even more. The problem in China is that the population suddenly became middle class and rich with money to pour away like water. To them, petrol price is nothing as when their income increase ten times each year, the petrol cost only increase 1 time. That's also the reason why all my relatives change vehicle each year and each year the car is bigger and more petrol consuming.

We cannot compare the exploding market in china to other countries. In Australia, unless you work in the mine, your salary is peg to inflation and maybe you get 4.2% pay increment next year, in china, you get 1000% pay increment each year easily both through your employer and through bribery. One of my relative is a public servant who earns miserable pay but he bought two apartments worth $300k AUD in the past year alone and he spent AUD$200 each meal or at least when I visit him over the two weeks that I spent at his house. That's how rich the chinese are. Petrol price increases? He don't even know the prices increase at the petrol pump station!!!

Wow, thats interesting.

The official inflation rate is steady but the bribery and black market inflation rate is going through the roof!

[Mick100]

[quote=Mick100;203502][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
17/06/08 net long 1900 134.01 1,335,200
24/06/08 net long 4650 137.00 1,306.100