I don't get how this can be anything but bearish. I see the guy from BP Capital's quote below...of course that's a private investment firm that puts people in energy futures, only, so I'm kinda skeptical of what his position might be. But supplies are higher than they've been in 5 years. The price is still double anything OPEC has ever "defended" before. They're predicting a mild winter, due to El Nino. Demand is decreasing on higher prices and economic downturn. Saudi is too smart to hold our hands to a recession which really impacts demand. Nigeria and Venezuela can't meet their freaking quotas and they're asking other nations to cut back production?! That's just priceless. http://www.bloomberg.com/apps/news?pid=20602099&sid=aNYRSHiXuakk&refer=energy Crude Oil Plunges to Lowest This Year on Doubts of OPEC Cuts By Mark Shenk Oct. 11 (Bloomberg) -- Crude oil plunged to the lowest this year in New York on doubts that OPEC ministers will agree to cut production enough to stem falling prices. ``Voluntary'' reductions will be made on ``a member-by- member'' basis, Levi Ajuonuma, a spokesman for OPEC President Edmund Daukoru, said in a phone interview from Abuja, Nigeria. The oil ministry of Saudi Arabia, the largest oil producer in the Organization of Petroleum Exporting Countries, declined to comment on whether the kingdom will participate in the cut. ``I don't think we will see an effective cut of much more than 500,000 barrels,'' said Peter Beutel, president of Cameron Hanover Inc., a New Canaan, Connecticut, energy consultant. ``The Saudis have been quiet, which suggests that they aren't that interested in defending prices that are almost double the highest they've ever tried to defend.'' Crude oil for November delivery fell 93 cents, or 1.6 percent, to $57.59 a barrel on the New York Mercantile Exchange. Futures touched $57.48, the lowest since Dec. 27. Oil is down 9.3 percent from a year ago. Prices are down 27 percent from the record of $78.40 reached July 14 amid concern that fighting in Lebanon between Israel and the Islamic militia Hezbollah, which is supported by Iran, would spread through the Middle East. ``I think you'll see $70 before you see $50,'' Boone Pickens, who oversees more than $4 billion at BP Capital LLC, said in an interview in New York today. ``It'll tighten up here in the fourth quarter and move back up, and we'll see $70 before the first of the year,'' Pickens said. ``I'm making decisions on that basis.'' OPEC Debate The group is debating whether to implement the cut by trimming ``actual'' production as opposed to lowering its quota ceiling, Qatar's Oil Minister Abdullah bin Hamad al-Attiyah said in a telephone interview today. The 10 members with quotas pumped 27.63 million barrels a day last month, falling short of their 28 million barrel ceiling, according to Bloomberg data. Nigeria and Venezuela have announced cuts totaling 170,000 barrels a day. The countries produced 470,000 barrels less than their combined quota in September, according to Bloomberg News data. Nigerian output has fallen because of militant attacks and sabotage. Venezuela has diverted funds from the state oil company and broken contracts with other companies operating there. ``It looks like a scheme by Venezuela and Nigeria to get other producers to cut output,'' Beutel said. ``They can't even meet their quota so it would be in their interest to see others cut back and have higher prices.'' Production Target The 11 members of OPEC, which produce about 40 percent of world oil, kept their output target at 28 million barrels a day at their Sept. 11 meeting. OPEC's next scheduled meeting is on Dec. 14 in Nigeria. ``The persistent headlines about OPEC making a cut suggest that they will eventually deliver on one,'' said Tim Evans, an energy analyst at Citigroup Global Markets Inc. in New York. ``The size of the price move lower begs for some kind of action by OPEC.'' U.S. Energy Secretary Samuel Bodman plans to speak with OPEC members as soon as this week to discuss the group's plan to cut output. Bodman also said he has encouraged OPEC and non-OPEC producers to pump ``significant quantities'' of oil. ``As time goes on, late this week, early next week, I would hopefully be in touch with various ministers to talk about markets,'' Bodman said today in an interview. Bodman said he will seek ``first to understand exactly what happened and what the situation is.'' Global Demand The International Energy Agency cut its estimates for global oil demand this year and next for a second consecutive month, citing the effect of high prices and slowing U.S. economic growth. World oil demand will be 84.57 million barrels a day this year, 110,000 barrels a day fewer than estimated last month, the Paris-based agency said today in its monthly Oil Market Report. The agency, which represents industrialized countries, lowered its 2007 consumption estimate by 200,000 barrels a day to 86.02 million. The increases will be driven by China, the second- biggest consumer, with gains of 6.4 percent this year and 5.5 percent in 2007. ``The oil demand growth in mature economies is slow at the best of times,'' Lawrence Eagles, an IEA analyst and main author of the monthly report, said in a phone interview in Paris. ``High prices have slowed that to a halt.'' World oil demand is now expected to rise 1.2 percent this year and 1.7 percent in 2007. In January, the IEA forecast world consumption would expand 2.2 percent this year. Rising Inventories U.S. crude oil inventories probably rose 1.5 million barrels last week, according to the median of forecasts by 14 analysts before an Energy Department report tomorrow. Supplies in the week ended Sept. 29 were 13 percent above the five-year average for the period. The U.S. consumes 25 percent of the world's oil. Brent crude oil for November declined 69 cents, or 1.2 percent, to close at $58.65 a barrel on the London-based ICE Futures exchange.
imho these cuts dont matter that much. venezuela, nigeria and indonesia can't produce their quotas anyway. and algeria produces a bit more but not enough to equate with the lack of production from those other countries. essentially 1 million less barrels gets the official line down to where the actual line is.
I didn't understand this earlier...but I think that's right. It's why SOME of the experts were saying as early as a few weeks back that even if OPEC announces some signficant cut, it still might not have any real meaningful effect on price.
So does OPEC plan to cut until their cuts DO have a significant effect on world prices? If everybody was saying that the cuts wouldn't affect prices then why do the cut anyway?
so then the next move they make has an effect. plus they haven't had a chance to cut quotas in a couple of years. and countries have different notions of what they want to do. nigeria and venezuela dont wanna lose quotas but they can't produce to the capacity of the quota. by cutting those down nothing happens but that does limit venezuela's output maybe in a couple of years when they have infrastructure to allow them to produce. and remember its not like OPEC really enforces their quotas. so countries that are able to produce a bit more perhaps like algeria (i think) do so anyway.
insane is right. and i think there's a misconception that OPEC is this unified force that truly enforces its own orders/quotas/etc. but that's just not an accurate represenation of that group. it consists of members who stand on uneven bargaining ground.
How does this help, at all, since 2006 is only 2.5 months away from being over with? OPEC Lowers Oil Demand Forecast for 2006 VIENNA (AFP) - The Organization of Petroleum Exporting Countries ( OPEC) has said it had revised down its forecast for growth in world oil demand in 2006 by 100,000 barrels per day. But the 11-member exporters' group, which is to hold an emergency meeting on Thursday to discuss falling oil prices, said it had left its forecast for growth in 2007 unchanged Monday. "In light of preliminary data for the first three quarters of 2006, world oil demand growth was revised down by 0.1 mb/d (million barrels per day) for 2006," the cartel said in its monthly report for October issued here. The new estimates showed that world oil demand in 2006 was expected to be on average 1.0 million barrels per day (bpd) higher than in 2005, instead of the previously expected 1.1 million bpd. Demand was expected to average 84.2 million bpd over the year, an increase of 1.2 percent. The October report said lower demand was due in part to "warm weather, higher oil prices and the relatively-lower natural gas prices," especially in OECD countries. "Robust US oil demand growth in September was not sufficient to offset the decline seen in the first two months," OPEC added. Oil demand growth for OECD countries was revised down by 300,000 bpd in the third quarter but was expected to recover in the fourth quarter. Strong economic growth in China and the Middle East had helped boost third quarter oil demand compared to last year, the report said. The world oil demand growth forecast for 2007 however "remains unchanged at a moderate rate of 1.3 mb/d or 1.5 percent," with China and the Middle East expected to add 420,000 bpd and 300,000 bpd respectively. Supply from non-OPEC countries is also set to increase next year, rising to 53 million bpd, up 1.8 million bpd from 2006, the cartel also said. OPEC confirmed in the report that it would hold an extraordinary meeting in Doha on Thursday to discuss a cut in production to check the fall in the price of crude oil. The cartel said that "even prior to the recent price decline, a consensus was evident within OPEC about the need for a proactive response to changing market circumstances." It added that "voluntary downward adjustments in output were an option left to the discretion of individual member countries" and said the aim of the Doha meeting would be "to review and consider further action needed to balance the market." It added: "In recent weeks, the speed and magnitude of the decline in crude oil prices has caught the market by surprise." This was because of "uncertainties about global economic prospects particularly in the USA, slowing demand growth, rebounding non-OPEC supply and high stock levels." But the cartel concluded by saying it was "in the long-term interest of both producers and consumers to maintain prices at levels that both support healthy economic growth as well as encourage much-needed investment to ensure sufficient capacity to meet future demand." World oil prices climbed on Monday, ahead of Thursday's meeting. New York's main contract, light sweet crude for delivery in November, advanced 63 cents to 59.20 dollars per barrel in electronic deals before the official opening of the US market. In London, Brent North Sea crude for November delivery gained 29 cents to 59.81 dollars per barrel in electronic trading.
http://www.chron.com/disp/story.mpl/headline/biz/4270334.html Saudi want's to keep it around $55. We'll see if they can do that. Smoke and mirrors. Saudis support oil production cutback By TAREK AL-ISSAWI Associated Press DOHA, Qatar — Saudi Arabia's oil minister said today that his country supports OPEC's proposed 1 million barrel-a-day production cut. "We will try to make the market balanced," Ali Naimi said, ending two weeks of silence from the world's largest oil producing nation and giving a quick jolt to oil prices. Naimi's statement came as the cartel's oil ministers gathered in the capital of Qatar for emergency talks on cutting output after a price decline of more than 25 percent since mid-July. Saudi backing is considered to be critical among analysts who have doubted two weeks of rumors that there was consensus for an output cut within the often fractious Organization of Petroleum Exporting Countries. It was still unclear, however, whether the cut will be made to OPEC's official production quota of 28 million barrels a day, or to its actual output, which is believed to be slightly below that level due to slackening demand. Light sweet crude for November delivery rose 37 cents to $58.02 a barrel in electronic trading on the New York Mercantile Exchange. Another OPEC official, speaking on condition of anonymity because he wasn't authorized to make announcements on behalf of the organization, said there was still no formal agreement, "especially on the details of such a cut." Indeed, just how the 1 million barrels per day cut will be divvied up is also a contentious issue among OPEC countires that depend heavily on oil revenues. The proposed cut would take effect Nov. 1. This would be the first time OPEC has trimmed its output since December 2004, when oil traded slightly above $40 a barrel and the cartel lowered its official production quota by 1 million barrels a day. Michael Fitzpatrick, a New York-based oil broker at Fimat USA, said "I'm not sure that a million barrels is going to be enough" of a cut to keep oil prices from further declines. "It's going to be more effective if it comes from actual production and not the quota," he said. OPEC is scheduled to meet again in December in Nigeria and many analysts believe a further cut could be implemented then. "They better act quickly and decisively," Fitzpatrick said. OPEC price hawks such as Nigeria and Venezuela have strongly advocated for a cartel-wide production cut since the start of the month. But without public support from Saudi Arabia, the market took with a grain of salt the likelihood of any cuts. Because several OPEC members, including Nigeria and Venezuela, have not been able to maintain production at the levels they have been allocated, the Saudis and others have had to pick up the slack in recent years (by exceeding their quotas) to meet rising global demand. Over the past few months, though, the Saudis have reined in production by about 400,000 barrels a day due to weakening demand. Now Saudi Arabia is likely to be pushing other OPEC members to chip in, analysts said, lest it cede further market share at a time of high prices. Still, Saudi Arabia regularly expresses some discomfort with soaring oil prices — crude futures surpassed $78 in July — in part because of its close relationship with the United States, the world's largest energy consumer. But Riyadh has more pragmatic reasons to worry: high energy prices have caused a surge of investment among non-OPEC oil producers and have ignited worldwide interest in conservation and alternative fuels. Many analysts believe that Saudi Arabia, and by default the rest of OPEC, is prepared to accept oil prices around the $55-a-barrel level. Whether the group can successfully manage its output to influence this target price is another matter altogether.
They announce a bigger supply cut than anticipated. The next day, oil falls $1.50/barrel...to $57.00 (as of 2pm), the lowest it's been the entire year, I believe.
Yea... no one believes they'll actually make the cuts real. I wonder if watching so many get destroyed in the hedge funds is going to change how the market reacts to news. At least for the next 12-18 months, before their collective memories fade.
http://chron.com/disp/story.mpl/front/4275281.html Oil prices fall to 11-month low on OPEC doubts By BRAD FOSS Associated Press NEW YORK — Oil prices fell to an 11-month low today in a sign that energy traders have doubts about OPEC's willingness to carry out a 4 percent production cut. Crude-oil futures traded below $57 a barrel. The pledge to curb output by 1.2 million barrels a day, announced after an emergency meeting in Doha, Qatar, came after oil prices had fallen by roughly $20 since a mid-July peak above $78 a barrel. Some cartel members warned output could be trimmed further when the group meets in December. But many analysts believe the Organization of Petroleum Exporting Countries will have difficulty enforcing the production cut in its entirety because oil prices are still twice as high as they were just three years ago. "It's clear there will be some production cutbacks. But is it going to be 1.2 million barrels? That's probably unlikely," said Andrew Lebow, a broker at Man Financial. OPEC has a history of "cheating," or producing above its official quota, when prices are high and analysts are therefore reluctant to accept the cartel's intentions at face value. Moreover, many analysts see OPEC's action as proof that the group responsible for supplying more than a third of the world's oil is increasingly worried about slowing demand growth and burgeoning supplies from non-OPEC sources. "What brought us to this point — where OPEC needs to reduce production by 1 million barrels a day — is bearish for prices," James Cordier, president of Liberty Trading in Tampa, Fla. "The fact is, demand has fallen or is about to fall more and OPEC is trying to catch this by producing less." Light sweet crude for November delivery on the New York Mercantile Exchange fell $1.60 to $56.90 a barrel. The last time front-month futures settled below $57 was Nov. 29, 2005. Oil prices have tumbled since summer due to rising global supplies, a weaker-than-anticipated hurricane season and expectations for slower economic growth. "The question now is whether OPEC members will comply with the new quotas or whether history will repeat itself and OPEC members over-produce," Global Insight analyst Simon Wardell said in a research note. "The markets appear to be betting on the latter." United Arab Emirates Oil Minister Mohammed bin Dhaen al-Hamili said the reductions will come from actual production levels, which are believed to be about 29.5 million barrels of oil per day. The official OPEC quota, which does not include Iraq's estimated output of 2 million barrels a day, is 28 million barrels a day. OPEC's announced cut was the first since December 2004, when oil traded slightly above $40 a barrel. It will take effect Nov. 1, just as global oil demand should begin to rise as winter approaches in the Northern Hemisphere. The move comes at the "worst time," said Claude Mandil, head of the International Energy Agency. Saudi Arabia, the world's largest producer, is set to reduce output by 380,000 barrels a day, while Iran will cut by 176,000 barrels a day and Venezuela will trim 138,000 barrels a day, analysts said. Wardell said the market should expect an actual cut of about 800,000 barrels a day and that "this will help to solidify prices." However, if the Northern Hemisphere winter is mild, energy prices could fall further, analysts said. Domestic inventories of heating oil and natural gas are well above historical averages for this time of year.
Yeah that didn't really make sense. What I mean is will people continue to pour so much money into hedge funds that it affects the price of oil dramatically? I'm sure you'll still see the airlines and other companies with high stakes in the price of oil as players. But will you see pension planners and the like continue to play these markets after being burned?
why are so many economists getting all concerned now the price of oil is lower. 12 months ago - when it was a similar value , the price wasnt a problem...infact everyone said it was too high, and hurting families and others by its strain on our home budgets.
I think it's the OPEC economists that are concerned. Economists I've read are concerned of a slowdown in the American economy and the effects it might have upon the world economy. They see lower oil prices as a possible result of lesser demand. Almost all would agree now that the former oil prices were too high or unsustainable. I've been reading articles about a Dot Com Bust 2.0.... As long as developing countries are pushing growth in world GDP, the thirst for raw resources and commodities like petroleum will remain high. We're still euphoric from a decade of easy gains (and painful losses). If anything, I'd think more people are beginning to take more risk in speculating across a broad range of markets beyond the traditional domestic stock and bond variety.
Jubak's Journal10/24/2006 12:00 AM ET Big Oil's 10 favorite members of Congress Wonder why we don't have a national energy policy or a serious push toward alternatives? Follow the money that oil and gas companies send to Congress. Think it's a matter of chance that we don't have a meaningful national energy policy? Wondering why oil and gas companies don't pay higher royalties to the Treasury now that oil is over $55 a barrel? Amazed that Washington loves to talk about energy research with promise 15 years down the road, but won't put significant money into alternative technologies that could reduce energy consumption now? For answers to all those questions and more, just follow the money. Nothing about U.S. energy policy should be a surprise if you know where the money's been going and which legislators have taken the biggest payouts from the energy industry. So don't miss your only chance in the next two years -- the Nov. 7 election -- to tell Congress what you think of its sellout to the energy companies. It has become increasingly expensive to run for national office, and any politician who wants to win has to raise big bucks these days. In the 2006 election cycle, according to the Federal Election Commission, as of Oct. 20, challengers and incumbents running for the House of Representatives had raised $713 million for their campaigns. Those for Senate had raised $452 million. And these figures don't include any of the money raised by "independent" organizations, so-called 527 groups such as Emily's List on the left ($9.6 million raised) or Club for Growth on the right ($6.2 million raised). Lawyers top contributor list Corporations and affiliated individuals have coughed up a big chunk of that money. By industry, the top honor on the giving roll goes to lawyers and law firms, with $89 million contributed, according to Federal Election Commission data compiled by the Center for Responsive Politics, which describes itself as nonpartisan and nonprofit. As the Republicans have said in campaign after campaign, the bulk of that -- 69% to 30% -- has gone to Democrats. But the Republicans don't need to worry; there's plenty of money coming into their till from other industries. Second place goes to the retirement industry with $86 million (54% goes to Republicans). Third place? The real estate industry with $53 million (57% goes to Republicans.) The oil and gas industry comes in at No. 15 with $14 million in contributions. The top five contributors were Koch Industries, ExxonMobil (XOM, news, msgs), Valero Energy (VLO, news, msgs), Chevron (CVX, news, msgs) and Occidental Petroleum (OXY, news, msgs), according to the Center for Responsive Politics. That $14 million puts the oil and gas industry in the company of such heavyweights as electric utilities (at $12 million) and the pharmaceutical industry (at $14 million). Most energy money goes to GOP The oil and gas industry's giving is highly, highly focused. Oil and gas executives seem to feel that with the Republicans in solid control of Congress, there's no need to give to anybody but Republicans, since they're the folks that can get things done. There's none of the fence straddling of the securities industry, which has divided its $46 million in contributions almost evenly between Republicans (47%) and Democrats (51%). A whopping 83% of oil and gas money has gone to Republicans in this election cycle. To find similar imbalance, you have to look at such Democratic bulwarks as the public-sector unions, 84% Democratic in their giving, and the building trades unions, at 83% Democratic. So who did this concentrated dose of cash go to? Here are the top 10 -- all Republicans -- as complied by the Center for Responsive Politics: Big Oil's 10 favorite Congress members Rank Candidate Office Amount given by oil and gas industry 1 Hutchison, Kay Bailey, R-Texas Senate $258,361 2 Burns, Conrad, R-Mont. Senate $188,775 3 Santorum, Rick, R-Pa. Senate $188,120 4 Bode, Denise, R-Okla. House $153,650 5 Allen, George, R-Va. Senate $148,600 6 Talent, James M., R-Mo. Senate $147,470 7 Cornyn, John, R-Texas Senate $142,750 8 Barton, Joe, R-Texas House $138,450 9 Hastert, Dennis, R-Ill. House $122,200 10 Pombo, Richard, R-Calif. House $121,340 Data from the FEC as of Sept. 11, 2006. Compiled by the Center for Responsive Politics. You've got to hand it to the oil and gas industry. They know how to support their favorite sons and daughters, of course: Texans Kay Bailey Hutchinson and John Cornyn, after all, are both senators from a big oil state. But the industry keeps its eye on the prize. If you want to keep oil and gas royalties low; if you'd like to drill in environmentally sensitive areas; if you want to keep the government from admitting that global warming might exist; if you want to make sure that money flows to research in alternative energy technologies for the future but not to commercialize alternative technologies today, then you give to the key people who can get those jobs done. So you contribute to the campaign of California Republican Rep. Richard Pombo, chairman of the House Resources Committee in charge of deciding how the oil and gas (and other industries) can use government land and how much they'll pay for that use. Pombo has been a point man in the House in efforts to open the Arctic National Wildlife Refuge to oil and gas drilling. (The committee's jurisdiction also extends to gambling on Indian lands. Pombo and his personal political action committee, known as Rich PAC, reportedly are being investigated in the Jack Abramoff lobbying scandal. Indian tribes paid Abramoff and his lobbying firm big fees in exchange for promises he would get favorable rulings from lawmakers and members of the executive branch on their casino plans.) Pombo is also involved in my favorite bit of election-year irony. He has been criticized for lobbying then-Interior Secretary Gale Norton to suspend regulations opposed by the wind-power industry because his parents collect sizable royalties from windmills on their ranch. Pombo, his critics have noted, has a personal interest in the ranch. So who should Pombo face in the 2006 election? Democrat Jerry McNerney, a wind-power engineer and CEO of a start-up wind-turbine manufacturer. The oil and gas industry also gives heavily to Texas Rep. Joe Barton, chairman of the House Energy and Commerce Committee; to Sens. James Talent of Missouri, Conrad Burns of Montana and George Allen of Virginia, all of whom sit on the Senate Energy and Natural Resources Committee; to Illinois' Dennis Hastert, speaker of the House, who plays a huge role in deciding what legislation moves to the floor for a vote and what doesn't; and to Pennsylvania's Rick Santorum, head of the Senate Republican Conference and announced candidate for Republican whip in 2006 if he wins re-election. Control of Congress up in air Among the top 10 recipients of oil and gas money, Pombo, Talent, Burns and Santorum face stiff races for re-election this year. That, plus the possibility of a shift in control of one or both houses of Congress from Republican to Democratic, creates some interesting angles for investors interested in playing potential changes in U.S. energy policy as the biases of Republican incumbents yield to the biases of Democratic replacements. Sometimes it's hard to tell exactly what the effect might be. So for example, a shift in control of the House of Representatives would be likely to unseat Barton as chairman of the House Energy and Commerce Committee. (Barton is a lock in his re-election. The incumbent has raised $2.7 million to Democratic challenger David Harris' $22,000. Harris had $932 in his campaign treasury as of Oct. 20.) Barton has been one of the fiercest congressional critics of global-warming theories. At a recent congressional hearing, he said, "As long as I am chairman, (regulating the gases that produce global warming) is off the table indefinitely. I don't want there to be any uncertainty about that." But Barton's likely replacement would be John Dingell, D-Mich., a fierce advocate for the U.S. automobile industry. In other cases, the effect of the change is easier to extrapolate. Pombo's likely replacement as chairman of the House Resources Committee would be Nick Rahall, D-W.Va. Can you say "coal," boys and girls? Money and politics go hand in hand No matter how the elections turn out this year, of course, the connection between money and politicians will survive. Incumbents of both parties know that taking the money out of politics -- I mean, really taking it out -- would destroy one of most effective tools they have for assuring their own re-election. Taking the money out of campaigns is less likely than the Easter Bunny passing out eggs in January. So vote your convictions. Throw this year's bums out. They certainly deserve it. Then watch to see which newly elected politicians start quickly to work to become next year's bums. And always remember the great American humorist Finley Peter Dunne's advice: "Trust everybody, but cut the cards." New developments on past columns 8 stocks to watch in a wandering market: On Oct. 12, PepsiCo (PEP, news, msgs) reported earnings of 86 cents a share, two cents a share above Wall Street forecasts. This is the third consecutive positive quarterly earnings surprise despite rising costs for energy and such raw materials as corn, sunflower oil and sugar. That's a clear indicator of the strength of PepsiCo's business. As in recent quarters, the international division was the growth star with international snack volumes up 12% in the quarter and international beverage volumes up 8%. International revenue climbed by 16%. Higher costs continued to pressure operating margins in the North American beverage and Frito-Lay snack businesses. Operating profits in the beverage business fell by 4% on 4% growth in revenue. Frito-Lay North America saw operating profits climb by 6% in the quarter on 7% revenue growth. For the year ahead, I expect that both the Frito-Lay and international divisions will be able to increase profit margins, while the North American beverage business will continue to struggle with higher costs. Earnings grew by 11% in the third quarter year-to-year and I expect earnings growth of better than 11% in the fourth quarter and better than 10% for 2007. As of Oct. 24, I'm raising my target price for PepsiCo to $74 by June 2007 from my previous target of $70 by December 2006. My target assumes a slowdown in U.S. economic growth that will increase the value of steady 10% earnings growth stocks and raise the price-to-earnings ratio that investors are willing to pay for PepsiCo shares. PepsiCo's current price-to-earnings ratio of 21.4 is well below the five-year average of 25.7. (Full disclosure: I own shares of PepsiCo in my personal portfolio.) Editor's Note: A new Jubak's Journal is posted every Tuesday and Friday. Please note that Jubak's Picks recommendations are for a 12- to 18-month time horizon. For suggestions to help navigate the treacherous interest-rate environment, see Jim's new portfolio, Dividend stocks for income investors. For picks with a truly long-term perspective, see Jubak's 50 best stocks in the world or Future Fantastic 50 Portfolio. E-mail Jim Jubak at jjmail@microsoft.com. At the time of publication, Jim Jubak owned or controlled shares in the following equities mentioned in this column: PepsiCo. He does not own short positions in any stock mentioned in this column. http://articles.moneycentral.msn.com/Investing/JubaksJournal/BigOils10FavoriteMembersOfCongress.aspx
"Oil prices climb nearly $2 a barrel" http://www.chron.com/disp/story.mpl/headline/biz/4286852.html This is basically what I was talking about a few weeks ago . . . Now the big question going forward as to oil prices relates more to winter temperatures.
and just like that, they're losing over $2/barrel as of noon, today. http://markets.chron.com/chron?Page=QUOTE&Ticker=$OIL
