. For me, going to get anything starts with a 9 mile ride into town. If I didn't have the use of a motorcycle for errands and things, I'd definately be in that category.
I want the Republican cabal to quit jawboning down oil and gas prices! 1. It keeps them in office 2. It stiffles innovation at a point when we were just getting serious. 3. I've got about 25% of everything I own in a little private drilling company
I understand your point and agree that eventually the price of oil will fall as more supply comes online, but that is still years, not months away. I also respectfully disagree with your view that the market hasn't changed that significantly. While a concept such as notional spare production capacity may seem insignificant, it is incredibly important. OPEC spare capacity was as high 4 million barrels/day in 2002 and 2.5 million barrels/day in late 2004. For the last two years spare capacity has been roughly 1 million barrels/day and combined with supply losses in Venezuela, Iraq, and Nigeria, this has limited supply to the point that prices had to rise to constrain marginal demand (not fundamental inelastic demand). Higher prices has achieved that as demand growth has moderated. Prices will not remain high forever, but they have responsed appropriately to fundamental changes in the underlying spare capacity in the oil market (sans the day to day volatility driven largely by traders). Just my 2 cents though
The spare capacity thing is hugely important. But not enough to justify a price increase greater than 3x value. That's out of control. I don't see a change in spare capacites as being a change to the fundamentals of the market. Particularly when our supplies haven't been this high in years. Essentially, everyone is saying there is far more out there in reserves than anyone dreamed. By all accounts, supplies are for bigger than you anyone imagined.
For China, at least, they weren't substituting coal, but rather they substituted oil in 2004 because of a coal shortage. Mid 2005 Economist article China and India still combine for less than 17% of all the world's consumption while America's 25% usage is still climbing. The biggest factor is still us and our penchant for SUVs (ownership+purchases). I do agree that prices will rebound early November. Last month was when American demand was at its lowest. It'll take some time for speculators to dump their inventories, and I believe that's why prices are still falling. Once winter heating and vacation travel picks up, the cycle will come full circle.
China caused the market to change in 2004 when it increased its oil demand by 900,000 barrels/day in a matter of TWO months that summer. That served to shock the oil market and began the increase in oil prices. Eventually, as 2005 progressed it drove up all the prices and led to product substitution away from all the diesel generators and back into coal generation as the Chinese government ramped up imports and local production of coal. For the last two years China has done everything possible to increase coal consumption so as to avoid further crude demand growth. It has worked to an extent.
yeah thats cool max I didnt mean to make light of the situation. I know aswell how much it hurts. At the moment though things are ok, so lets hope it stays that way for awhile. I know based on your theorem that it will go up and down over an over though, so lets hang on for that.
the market doesn't move that quickly. it's not gonna fall 25% and then go up again 25% in the same time frame. this isn't a crazy fall. this is a market correction. that's the point. it was overvalued for so long based on fears that never came to fruition. it's a big bubble that popped when the forces driving the price upward turned out to be bunk. they're already saying that they're overstocked for winter heating. the analysts were saying that last week. that's part of why oil fell so quickly. we're oversupplied right now. there's a glut on the market. part of that is decreased refining capacity..part of that is because these countries were pumped assloads of oil out when they were getting $75.
Unless I'm reading the Chronicle's page wrong...it appears that Nymex oil has fallen $3/barrel as of 2pm this afternoon. This just ONE DAY after the OPEC stuff about cutting production. http://markets.chron.com/chron?Page=QUOTE&Ticker=$OIL It's just about $3 off the lowest it's been in the last year.
HUGE news. These guys are raking in money at $40/barrel. No way they're cutting back production when they're making this much per barrel relative to where the price has been historically. Reason prevails again. Good news for the little guy. Good news for the guy who cuts my lawn. Good news for my friend who has to drive around town to clean houses for a living. Good news for an economy that showed some strong signs of weakening. http://www.chron.com/disp/story.mpl/headline/biz/4247920.html WASHINGTON — Oil prices sank to their lowest level in nearly eight months today as doubts mounted that OPEC is on the verge of slashing its output by almost 4 percent. Analysts said the 1 million barrel a day cut sought by some members of the Organization of Petroleum Exporting Countries does not appear to have the support of Saudi Arabia, the cartel's largest producer, and is therefore unlikely to be implemented. "This has been a complete disaster" for OPEC, said Michael Guido, director of commodity strategy at Societe Generale in New York. Guido said the market is extremely skeptical that OPEC members are willing to voluntarily sell less oil right now, given that prices are twice as high as they were three years ago — even after a recent 25 percent decline. Even if there is a formally announced output cut of 1 million barrels a day, it might not have much impact, Guido said, because "the market is completely suspect of who's going to comply." Prices could conceivably fall to $50 a barrel, Guido said, if economic growth slows and if the Northern Hemisphere winter is not particularly cold. On Tuesday, light sweet crude for November delivery on the New York Mercantile Exchange declined by $1.44 to settle at $58.52 — the lowest close since Feb. 16. November Brent crude at London's ICE Futures fell 75 cents to $59.79 a barrel. Also today, the U.S. government said winter heating bills are expected to be slightly lower for most families across the nation, with the highest reductions for those who use natural gas. Families using natural gas should expect to pay an average of $119 less during the upcoming winter compared with last year, a decrease of 13 percent, the Energy Department said. Those heating their homes with fuel oil will pay $91 more, an increase of 6 percent, it said. After peaking at $78.40 in mid-July, oil prices plummeted because of rising worldwide inventories and concerns about slower economic growth, as well as the mild Atlantic hurricane season. Following the late-summer freefall of almost 25 percent, Nymex crude oil prices have bounced around the $60 level in the past week. Kuwait's energy minister said Monday that the Organization of Petroleum Exporting Countries is considering trimming its daily output by anywhere from 700,000 barrels to 1 million barrels. OPEC is not scheduled to meet until December, though there is talk of a possible emergency meeting before then. The last time OPEC trimmed its output — by 1 million barrels a day — was December 2004 when oil traded slightly above $40 a barrel. Still, the uncertainty has helped to discourage aggressive selling near-term. In other Nymex trading, heating oil futures fell 4.88 cents to settle at $1.6809 a gallon while gasoline futures fell 2.81 cents to settle at $1.4668 a gallon. Natural gas futures increased by 3.7 cents to settle at $6.466 per 1,000 cubic feet.
Yeah, I was going to post the article too. Good looking out Max. It looks like oil prices are crumbling although we may not see prices as cheap as we have in the past it's better than what it used to be.
So what kind of prices is everybody seeing? The lowest I have seen around my town (Jonesboro, AR) is $1.94.
it's $2.06 at the Shell i usually buy gas at. Did you see OPEC make their announcement today?...and the London market barely moved. I don't think anyone trusts that the countries will actually abide by their own limits. Not when the price is still this high, historically.
here ya go: http://www.chron.com/disp/story.mpl/front/4250790.html have to anticipate that Nymex crude will go up at least a $1 today.
Yeah, I see right there at the beginning of the article that oil price barely moved after the announcement. Wy is OPEC being so greedy? I mean if they can make hoards of money off of $40/barrel then why try to keep it more than that? I mean why not let it slip to around $40-45 a barrel. That way they're still making a killing and everybody else is happy as well.
because it's listening to countries like venezuela and nigeria...which are "get rich quick" situations. saudi is much smarter and much more concerned with long-term viability of the price. in the end, i'm not sure any of these countries are gonna fully abide by their own limitations. oil is well above where it's been historically. it's not costing them any more to pump this stuff out now and ship it. i've yet to see an expert say the higher prices were based on anything but fruitless fears. so they're just trying to keep it artificially propped up. so much for the theory that saudi is cooperating with the GOP for elections.
Oil is trading below $58 right now. is there still about two months before the heating oil market begans to heat up, assuming a very cold winter? how low can the price go until then?
i'm shocked! even with the OPEC announcement, it's still dropping. that's waht some of the pundits were saying would happen. i knew that was possible, but really expected a quick, short-lived spike. that it's falling today indicates to me that market is much more bear-ish than most previously thought. and actually...they're saying the heating oil market is overstocked. you'll definitely see a drop in your natural gas bills from last winter to this winter. forecasts are saying El Nino means a mild winter, too. we'll see. i'm giddy!
