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$100 is a resistance point, in the chartists sense. As the price approaches $100 people will take profits so it will take two or three goes to get there.
Another issue is the global economy, which is slowing everywhere now and not just in the US. If the oil price is a call option on global economic growth (my view) then demand may tail off a bit so the price could well fall back to $90.
My bet is the $100 mark will be passed in the 1st quarter 2008 when demand is at the winter high. TODers should know better than to believe the MSM :-)
I think it depends on the inventory report. If it's much lower than expected this week, we'll have $100 oil. Though maybe only briefly.
Hi Leanan,
There are two possible causes for low crude inventory.
1. Demand for refined products is high.
2. Refiners see price/demand falling so start destocking crude. If they think the price will fall they will hold off.
The oil price slumped in 1997 when the Asian financial crisis happened because of destocking, and believe me, the economy is not doing well - the economists at the investment bank where I work see problems everywhere.
Maybe you are right, Leanan, but making money in the futures markets can never be easy. I'm back-pedalling from $100. It's just too neat and tidy for me. (I'm not a trader by the way!).
The causes for low inventory I'm thinking about are the disruption in Mexico due to weather (which will probably show up in the numbers this Thursday), and possibly shut-in production from Ursa and Mars (if the rumors are correct - Shell said they would issue a statement, but never did).
I think it depends on the inventory report. If it's much lower than expected this week, we'll have $100 oil. Though maybe only briefly.
I don't think it will be as simple as that this week. There are several complicating factors. The inventory report will be a day delayed, and the December contract expires the next day. Then, we have OPEC meeting at the end of the week. I think all of this will make it very tough to gauge what's going to happen this week. But with the contract expiring, I expect people to take profits, and if there is a bad inventory report the upswing will be tempered by those wishing to take profits and avoid getting stuck with delivered barrels.
Plus, for the reasons musashi points out below and others, there are stock market problems and dollar moves that will likely put pressure on the price.
This week is going to be strange. The time release MOAB hits Wall Street on thursday (FAS157). Maybe we see a couple dead cat bounces, but then ..........
http://www.cfo.com/article.cfm/10097878/c_10098290
What's the chances they will "Table" FAS157 for a year?
Saying that it's for "The Common Good" or something?
John
IMO zero, if they change it now it would be the same or worse, like the regulators openly admitting that they are in bed with the fraudsters.
They can game it by fiscal year date to a point, so there is a built in delay, but on the other hand as soon as one is marked to market they all are.
I'm sure you know what they are worth.
Another opinion.
http://market-ticker.denninger.net
Hong Kong is down, Tokyo is down big time and the yen just broke 110 ..... 109.97 ..... that was a bit of a resistance point sort of like 100 oil.
Ms Watanabe is going to need her sake tonight.
"Ms Watanabe is going to need her sake tonight."
What do you mean by that? It depends on whether Ms Watanabe has the bulk of her portfolio in stocks or cash. If she has yen collecting dust in the bank, she will in fact be toasting with her sake and maybe some bubbly, rather than gulping it down. The yen is rising, because the carry trade is unwinding due to market turbulence, and look for a New Year's rate increase from the BOJ. With peak oil, faltering US consumer spending and increasing buying power in Europe et al, Japan now needs a weak currency to drive exports much less than it does a strengthening yen to offset rising energy costs. The yen has been lagging behind other currencies' rises, and now it is poised to take off. 109 is nothing. Wait till it gets below 100 JPY/USD next year. You'll be able to tell by the numbers of Japanese tour groups that suddenly swarm European capitols next summer.
It refers to a pretty recent FT? article that was widely circulated talking about Japanese house wifes day trading, specifically using the yen carry trade. They called her "Ms Watanabe".
The yen carry trade hasn't completely unwound yet, but with the margins the higher valued yen is a huge hill to climb.
If BOJ raises rates and BenDover lowers them some more we will have a Dollira (US peso?) carry trade.
You might be right in the short term, but Europe has huge problems in the longer term. What are they going to do with all the third world immigration once exports start to fall like a rock and the jobs go away?
The 100$-barrel is polite, just holding back for a little while, allowing for the programmers of electronic charts and tables to adapt for another digit .. “Y2K lite”
They fixed the price displays outside UK petrol stations some time ago. Now showing 1.01 pounds. Ouch!
Perhaps they should program for two extra digits whilst they are at it ?
Alan
PS" I would not buy a gas pump today without the ability to charge $99.999/gallon. And I would ask about higher prices if inflation gets out of control.
I think $100 is indeed a resistance line only in terms of technical analysis trading.
Real need for oil products or fundamentally investing people do not mind about $100.
It's just another number.
What matter is how much can one afford, what does one get as a benefit and is it really worth it.
That economic pain point varies based on use and need.
If $100 really becomes a ceiling for a while, I think we can safely conclude that a big chunk of the recent rise is highly speculative investor influenced (technical trader) run up.
If it breaks through $100 as easily as any other number, then it's probably more real (inelastic) demand driven than anything else.
I was reviewing Westexas's Export Land Model (ELM) this morning and was wondering how we are doing with world exports. So I went over to http://netoilexports.blogspot.com/ and looked at the data for the Top 16 Exporters (based on EIA data).
Since the monthly data is a little noisy I averaged the 5 months centered on the peak of September 2005 and then the averaged of the last 5 months, May – Sept. 2007.
That has us at 40.1802 mbpd at the height and 38.0718 mbpd now or a drop of 2.1084 mbpd of all liquids.
In 2006 the top 8 importers imported the average of 30.526 mbpd of all liquids (U.S, China, Japan, Germany, India, S. Korea, France & Italy).
I can see why we're at $95 oil now and I wonder what the price of oil will be when we are down 3 mbpd from the peak?
Out of the city and back to the Islands this Wednesday.
Ed
www.mvjoybells.com
Off Grid, Off Mainland, current profession:Beach Bum
Sam
I see stock markets world wide generally fell all last week.
What would be the consequences for oil if they continued to fall all this week.
Or is that just too unlikely?
Is the price of oil affecting stock markets or is it just the credit bubble?